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"On its website, Kraken explains that, as a bank, it is required by Wyoming law to maintain reserves equal to 100 percent of deposits that it has received at all times." Its news to me that Wyoming (or any state) requires its banks to have 100% reserve-backed deposits! 1/2

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Bank Policy Institute

@bankpolicy

· Oct 21, 2020

Treating payment tech companies like full-fledged banks can endanger customer deposits. The business model of Payward Inc’s Kraken Financial, part of a US-based cryptocurrency exchange that WY bank authorities just approved for a special-purpose bank charter, shows just that.

Lawrence H. White

@lawrencehwhite1

Oct 21, 2020

It's a "special purpose" license, under a new law, for a bank with crypto assets.

financemagnates.com

Kraken Gets License for Wyoming’s First Cryptocurrency Bank

Cryptocurrency exchange Kraken has secured approval from US state regulator in the US to launch a crypto bank under an SPDI charter.

George Selgin

@GeorgeSelgin

Oct 21, 2020

I got it now. It's the statement that Wyoming "banks" must hold 100% "reserves" that was news!

Jesse Powell

@jespow

Oct 22, 2020

Not all banks in WY, just the SPDI. The SPDI is required to be full-reserve, and cannot be fractional. That means its lending would be limited to its own balance sheet/reserves > 100% of client liabilities.

Playful12

@Playful121

Oct 22, 2020

So if you custody bitcoin, what kind of loan terms can you give? Or can BTC owners loan to you?

Replying to

If we were to lend BTC, it would be our own BTC or BTC that we borrowed. We would not be lending BTC that we are holding in custody for clients.

3:16 AM · Oct 22, 2020Twitter Web App

Replying to

Thank you. Will you borrow BTC from bank customers? In holding BTC custody for clients, will you hold in trusts & handle trust distribution as executors of estates? Any offering of financial planning and/or monetization? Raol Pal says bitcoin the most pristine collateral.