Federal Reserve Bank of Kansas City Approves Limited Purpose Account for Payward Financial d/b/a Kraken Financial

Earlier today, the Federal Reserve Bank of Kansas City announced that it has approved a limited purpose account for Payward Financial d/b/a Kraken Financial, an uninsured Wyoming-chartered special purpose depository institution.[1] The limited purpose account has an initial term of one year and includes restrictions and limitations tailored to Kraken Financial’s business model and risk profile that are “appropriate to mitigate risks identified” in the Federal Reserve Board’s Guidelines for Evaluating Account and Services Requests (the “Guidelines”). The announcement states that the FRBKC does not disclose specific information about accountholders’ access to Federal Reserve services, due to the confidentiality of institutions’ business information, and the announcement does not specify the restrictions and limitations applicable to the account or services available to Kraken Financial.

The Guidelines establish a framework for the Federal Reserve Banks to use in evaluating requests for “master accounts” or services. The Guidelines call for the Federal Reserve Banks to consider whether granting an account or services to an institution would present or create undue risks to the Federal Reserve Banks; to the overall payment system; to the stability of the U.S. financial system; or to the overall economy as a result of illicit activities. The Guidelines also call for the Federal Reserve Banks to consider whether granting an account or services would adversely affect the implementation of monetary policy, as well as whether doing so has the potential to set a precedent that could affect the Federal Reserve’s ability to achieve its policy goals. The Guidelines contemplate that a Federal Reserve Bank may impose restrictions on any account.[2]

The Guidelines set out a three-tier review framework for requests for Federal Reserve Bank accounts and services:

• Tier 1: legally eligible institutions that are federally insured, which are generally subject to a less intensive and more streamlined review;
• Tier 2: legally eligible institutions that are not federally insured but are subject by statute to prudential supervision by a federal banking agency (e.g., national trust banks or members of the Federal Reserve System), which are generally subject to an intermediate level of review;[3] and
• Tier 3: all other legally eligible institutions, which are generally subject to the strictest level of review.

Kraken Financial is a Tier 3 institution because it is an uninsured depository institution that is not subject to prudential supervision by a federal banking agency.

In December 2025, the Federal Reserve Board issued a request for public input on a “payment account” (the “RFI”), a special purpose Federal Reserve Bank account prototype tailored to the risks and needs of institutions focused on payments innovation.[4] Under the RFI, payment accounts would be available to legally eligible financial institutions without a full-service Federal Reserve Bank “master account.” As described in the RFI, payment accounts would be used for the “express purpose of clearing and settling the institution’s payment activities.”[5] They would be subject to a common set of “risk-mitigating” limitations, including a prohibition on overdrafts, lack of access to the discount window, an overnight balance limit, and an absence of interest on overnight balances.

The account approved for Kraken Financial is the first approval of an account for a Tier 3 institution since the publication of the RFI. Although the account may represent the first “payment account” approved by a Federal Reserve Bank, today’s announcement did not address whether this is the case or if the account is subject to limitations similar to those set out in the RFI. It is also unclear the extent to which the FRBKC or other Federal Reserve Banks may grant similar accounts to other Tier 3 institutions in the future; as noted in the Guidelines, decisions regarding individual access requests are at the discretion of the individual Federal Reserve Banks.