According to TD Cowen Managing Director Jaret Seiberg, Kraken’s approval of a limited-purpose master account is the “first of many” approvals to come.
- In a note to investors cited by The Block, TD Cowen said that the crypto industry’s access to Federal Reserve master accounts was “inevitable” under President Donald Trump.
- The investment firm added that the trend is likely to continue despite pushback from banks.
- Pending applications include Ripple’s request for a Fed master account in July last year, and Anchorage Digital’s bid in August.
The chances of companies like Ripple (XRP) and Anchorage Digital getting approved for Federal “skinny” master accounts, as Kraken did, are looking brighter, according to investment bank TD Cowen.
"We see this as the first of many Federal Reserve approvals for crypto entities to obtain master accounts," Jaret Seiberg, managing director at TD Cowen, said in a note cited by The Block. His comments come after Kraken’s banking unit, Kraken Financial, became the first crypto to get approved for a “limited purpose” account by the Kansas City Fed.
Ripple, through Standard Custody, applied for a similar Fed master account in July last year, which would allow it to quickly redeem reserves for its dollar-pegged stablecoin Ripple USD (RLUSD), rather than relying on bank intermediaries. Anchorage Digital, a cryptocurrency custodian bank, applied for a Fed master account in August of that same year.
"As we have written since the election, crypto entity access to master accounts was inevitable under President Trump, given his support for the crypto sector,” wrote Seiberg. “We expect additional announcements in the coming months."
What Is Retail Saying?
Retail sentiment on Stocktwits around Kraken, expected to launch its initial public offering (IPO) later this year, trended in ‘extremely bullish’ territory amid ‘extremely high’ chatter over the past day.
Ripple’s native token, XRP, fell 1.6% in the last 24 hours to around $1.39 – trading more than 60% below its record high of $3.65 seen in July last year. Retail sentiment around the altcoin on Stocktwits remained in ‘bearish’ territory over the past day. Meanwhile, retail sentiment around Ripple’s stablecoin RLUSD trended in ‘neutral’ territory over the past day.
One user said they were bullish on XRP because of how the blockchain network is integrating itself into Wall Street’s “core financial structure.”
Another noted that while XRP’s price was down, it didn’t take as much of a hit as the U.S. stock market, where the Dow dipped 1.6%, putting the index on track for its second negative week in a row and its worst week since last October.
Banks Are ‘Deeply Concerned’ About Master Account Approvals
The Bank Policy Institute said on Wednesday that it was "deeply concerned" that the Kansas City Fed approved a limited-purpose master account request before the Federal Reserve Board finalized its policy framework for those accounts. According to TD Cowen, banks are likely to continue opposing such approvals, but the trend of “skinny” master accounts is likely to continue.
Read also: Where Is Bitcoin Headed Next? February US Jobs Data May Provide Cues
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