Last week, Kraken became the first cryptocurrency firm in the U.S. to charter a bank. The Wyoming Banking Board voted on Wednesday to approve the San Francisco-based crypto exchange's application for a special purpose depository institution (SPDI) charter, allowing Kraken to be the first SPDI bank. Kraken Financial CEO David Kinitsky said: "By becoming a bank we get direct access to federal payments infrastructure, and we can more seamlessly integrate banking and funding options for customers." As a state-chartered bank, Kraken enjoys a regulatory passport into other states without needing deal with a patchwork compliance plan by state. Kraken Financial will give Kraken the ability to operate in more jurisdictions and offer new products. Kinitsky added Kraken sees new products like qualified custody for institutions, digital-asset debit cards and savings accounts, new asset classes, and engagement with securities and commodities. SPDIs are not allowed to lend, Kraken expects its major revenue to come from fees and services. Kraken is now expanding operations and staff for its bank.
Here is the rest of the week in review:
Kava Labs launched its first application Harvest, a yield-generating decentralized finance (DeFi) platform for Bitcoin (BTC) and other non-Ethereum (ETH) assets. The product built on the Kava blockchain allows users to stake their crypto so it can be lent out to other users. Harvest will initially support deposits of BTC, BNB, BUSD, and XRP. Kava Labs CEO Brian Kerr said the firm also plans to launch automated market makers (AMMs) like Uniswap and robo-advisors like Yearn.Finance (YFI) on the blockchain also. Similar to DeFi platform MakerDAO, Kava will let users create collateralized debt positions on the Kava protocol in exchange for a USDX stablecoin, pegged one-to-one with the US dollar (USD). Unlike Maker, Kava accepts assets outside the Ethereum ecosystem. Harvest users who borrow or lend on the app will be paid interest and HARD tokens, Harvest's governance token, which is used to incentivize liquidity on the platform. Kava is built on the Tendermint consensus algorithm, and Kava Labs conducted an initial exchange offering on Binance in October 2019 to raise seed capital.
Societe Generale's tech arm confirmed plans to use up to 5 different blockchains to trial digital securities and a central bank digital currency (CBDC). Forge, a tech subsidiary of the French investment bank, announced it is experimenting with the Tezos (XTZ) blockchain to gauge its utility for capital market activities. Tezos' protocol, consensus proof-of-stake algorithm, on-chain governance, and smart contract language will be used to test for "high-value financial applications." Forge will also use Tezos for a CBDC experiment for interbank settlements, run in conjunction with the French central bank and financial regulators. Forge CEO Jean-Marc Stenger noted the firm is considering running trials on a handful of blockchains, though he declined to disclose specific names. He added Societe Generale hopes to test up to 5 separate blockchains.
Crypto prices rose to $349 billion this week. For the majors, Chainlink (LINK), Binance Coin, and Polkadot (DOT) posted outsized losses, while Bitcoin jumped 5.1%. In the top 100, the biggest losers were SushiSwap (SUSHI), down 31%, DFI.Money (YFII), down 30%, and Flexacoin (FXC), down 29%. The biggest gainers were Hyperion (HYN), up a whopping 111%, ABBC Coin (ABBC), up 60%, and Celsius (CEL), up 54%.
The author owns a small amount of BTC.