Kraken, a digital currency exchange, announced on 16 September 2020 that it has received approval to establish Kraken Financial, the first Special Purpose Depository Institution (SPDI) in the state of Wyoming.
In 2019, the Wyoming Legislature enacted HB 74, which authorises SPDIs to receive deposits and conduct other incidental activities including fiduciary asset management, custody and related activities. The SPDIs are able to conduct activities similar to custodians but tailored for digital assets, virtual currencies, digital securities and utility tokens.
The Wyoming Division of Banking anticipated that the SPDIs will likely focus on fiduciary activities, safekeeping, asset management and servicing.
Kraken stated in relation to the products and services it proposes to offer that:
During its first year of operations, the SPDI plans to give clients the ability to deposit USD and custody digital assets at a regulated state-chartered bank. These banking services will be seamlessly integrated into the existing exchange services, providing clients better funding infrastructure, a better experience and enhanced regulatory clarity.
David Kinitsky, Managing Director of Kraken Financial, stated in an interview with Caitlin Long, CEO of Avanti Financial Group, that:
We're in an interesting period in financial services in general where we're seeing the merging of the digital asset industry with fintech's traditional financial services... This is why the SPDI is so interesting. It allows us to tie together and play across that landscape — across digital assets, fintech and traditional financial services within a banking framework.
It is anticipated that this development will be the first of many other digital asset businesses adopting more traditional banking regulation and compliance to provide broader digital services and products to the public in Wyoming and the US.
Caitlin Long also posted on LinkedIn that Wyoming has seen a 75% increase in business registrations in the state in the year to date as a result of a more favourable regulatory system for Fintech and Blockchain businesses.
Other overseas legislators and regulators will be watching the developments in Wyoming closely to consider whether it should also adopt similar legislation to regulate and attract the growing digital asset industry to their own jurisdictions.