Kraken wants to be a (legally speaking) bank. Why?

A bitcoin by any other name
What is the point of bitcoin? Of cryptocurrencies in general? It's not an idle question.

Payward, the parent company of the crypto exchange Kraken, applied for a trust charter with the Office of the Comptroller of the Currency. Kraken, you may recall, was the first to receive a limited master account at the Federal Reserve. If it got the charter and eventually a full master account, you could broadly categorize Kraken as a bank. The Independent Community Bankers of America, an important trade group, came out publicly against the application, our Carter Pape reported, and is worried about the risks of the whole idea of letting crypto firms and their dodgy, volatile currencies into the banking system proper. 

But I'm interested in a different question: Why? Why is Kraken and why are all these other crypto firms going down this road? I get that part of it is just a get-it-while-you-can attitude. The current president has his own crypto businesses and is favorably disposed to the industry. And I get that part of it is that these firms can offer more services and run better businesses inside the regulatory framework. But, like, why do they even want that?

Bitcoin was not created to be part of the traditional finance system. Go read Satoshi Nakamoto's white paper for yourself. "What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party." He wasn't trying to build an asset within the traditional system. He was trying to get around the system. The trusted third parties he was talking about are banks.

Bitcoin was going to be a digital equivalent of cash, a currency for the internet that would allow people to replicate the kind of transactions that occur with cash in real life. The problem in those early days was that most of the bitcoin software was so obtuse that only hard-core techies could use it. What made the whole thing take off was the very thing Nakamoto was trying to sideline: trusted third parties. Brian Armstrong founded Coinbase, Jesse Powell founded Kraken, and there were dozens, probably hundreds of others. They handled all the messy parts of digitally exchanging currency that most people weren't tech savvy enough to handle. 

And now you have Kraken and a bunch of others trying to secure all the licenses to become the exact thing bitcoin was created to go around, a trusted third party. The irony is rich, excuse the pun. Maybe Nakamoto was naive, maybe trusted third parties are just essential in finance. But if the world of crypto is going to be dominated by trusted third parties the same way traditional finance is – and frankly crypto has been dominated by third parties for years – it raises the question of what's the point of all this anyhow? Maybe the Fed should just issue a digital dollar, let the banks manage it, and call it a day. That's the real way to get around the risks the ICBA raised, and it seems to be the model the crypto industry is now trying to build anyhow.

The best fintechs to work for
It's that time again. American Banker is presenting its tenth annual list of the best fintechs to work for. Our Melinda Huspen wrote the lead story, and there's a profile of the number-one company, IntraFi, and a feature on what makes these companies such good places to work. It is an eclectic group of companies that hail from 18 states and the nation's capital, many of them far from Silicon Valley or Silicon Alley (yes, I'm really dating myself with that one). Some of them you've heard of, some of them you probably haven't. The largest, California's Jack Henry, has more than 7,000 employees. The smallest, Centime in Massachusetts, has just 10.