David Kinitsky, CEO of Kraken Financial, talks about Kraken’s news that it is launching a bank, after receiving approval to form a special purpose depository institution (SPDI) from the state of Wyoming. He discusses:

  • why Kraken decided to become a crypto bank, and what it will be able to do with this status
  • how this status will affect the consumer experience for crypto users 
  • what kinds of crypto assets it will be able to deal with 
  • how quickly it will list coins, such as those DeFi coins that quickly balloon to billion-dollar market caps
  • what its designation, special purpose depository institution (SPDI) means, and why that has special meaning for crypto users
  • what “bailment” means, and why that’s significant for crypto users interested in using a crypto bank and how that would affect users in the event any coins were stolen or lost
  • how Kraken Financial’s status as a crypto bank will affect the longstanding problem in the industry of obtaining and maintaining bank relationships
  • how this overlaps and works in conjunction with other recent regulations that have affected the crypto industry, such as the OCC saying banks can custody crypto assets
  • how its SPDI status will affect how Kraken Financial is regulated in New York State where the BitLicense is in effect
  • why Kraken, which has a reputation for pushing back on what it deemed to be overreach by regulators, decided to pursue the SPDI
  • how Kraken Financial will make money, despite keeping 100% reserves
  • David’s extensive background in cryptocurrency
  • the timeline going forward for Kraken Financial 

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Episode links: 

David Kinitsky: https://twitter.com/Kinitsky

Kraken: https://www.kraken.com/en-us/

Kraken announcement about Kraken Financial receiving the SPDI title from the Wyoming Banking Board: https://blog.kraken.com/post/6241/kraken-wyoming-first-digital-asset-bank/

CoinDesk story: https://www.coindesk.com/kraken-crypto-exchange-secures-bank-charter-under-wyoming-law

The Block story: https://www.theblockcrypto.com/post/77804/kraken-crypto-bank-launch-wyoming

Kraken Chief Legal Officer Marco Santori tweet storm on the significance: https://twitter.com/msantoriESQ/status/1306236234675740672?s=20

Previous episode of Unchained on crypto friendly regulations in Wyoming: https://unchainedpodcast.com/eth-denver-fireside-chat-with-2-of-the-most-crypto-friendly-governors-in-the-nation/

OCC allowing banks to offer cryptocurrency custody services:

https://www.coindesk.com/us-banking-regulator-suggests-federal-licensing-framework-for-crypto-firms https://www.coindesk.com/banks-in-us-can-now-offer-crypto-custody-services-regulator-says https://www.coindesk.com/occ-crypto-custody-years

Conference of State Bank Supervisors’ new regulatory regime: https://www.reuters.com/article/us-usa-regulators-crypto/u-s-crypto-fintech-firms-to-benefit-from-slimmed-down-regulatory-process-idUSKBN2661OA

Links from news recap: