Kraken’s NFT Platform Closure
Just over a year after its formal launch, cryptocurrency exchange Kraken has declared that it would shut down its non-fungible token (NFT) platform.
Kraken explained its intention to move the marketplace into a withdrawal-only phase beginning November 27 in an email to customers. Before the marketplace is permanently shut down, users will have three months to move their NFTs to other sites. This action is a part of Kraken’s strategic decision to focus resources on new product development and developing ventures.
This choice is in line with a larger plan to maximize resource allocation, a Kraken representative underlined. To guarantee a seamless transition, the business assists its customers in moving NFTs to external self-custodial wallets or Kraken Wallet.
NFTs’ Changing Environment and Market Difficulties
Following a trial period, Kraken’s NFT marketplace was formally launched in June 2023, providing over 250 collections and exempting buyers and sellers from gas taxes. Its shutdown, however, brings to light the changing difficulties facing the NFT industry.
According to Cointelegraph, recent DappRadar data highlights the market’s difficulties. When compared to the USD 12.6 billion achieved in Q1 2022, NFT trade volumes in August 2024 fell to USD 471 million, a 16% decrease from July. Even while there was some improvement in November, total activity is still far below its high.
Specialized Platforms’ Competition
Well-known NFT platforms like OpenSea and Blur posed a serious threat to Kraken’s marketplace. As an example, OpenSea reported a 27% decrease in trade volume in August, at USD 110.5 million. Kraken’s position in the NFT market was made more difficult by these competing forces.
Barriers to Regulation in the NFT Sector
More regulatory scrutiny has also had an impact on the NFT sector. The U.S. Securities and Exchange Commission (SEC) warned OpenSea of potential enforcement actions against collectible tokens in August 2024 with a Wells notice. The uncertainty surrounding NFTs has increased as a result of this development.
Kraken has encountered regulatory obstacles, like as legal inquiries about the Howey test’s classification of specific coins on its platform as securities. It’s unclear if Kraken’s decision was directly impacted by these regulatory demands, but the general absence of precise rules for NFTs has surely made things difficult for all market participants.
