Kraken’s NFT Marketplace Shuts Down, Now in Withdrawal-Only Mode
Kraken Closes NFT Marketplace to Free-up Resources for New Products
Kraken Announces Closure of Its NFT Marketplace, Aims to Focus on New Projects
Kraken, the Crypto exchange company, is shutting down its NFT marketplace in 3 months’ time, i.e. on the 27th of February, 2025. The reason behind this decision is its aim to focus on other projects. However, it is visible that the decision may have also come as a result of the global NFT (non-fungible token) industry experiencing decline for the past five months.
A Decline in the NFT Industry
The NFT industry saw a rally from November 2023 to June 2024 that ended in Q2. There was only a slight rebound in the weeks ending November 11 and 18, with the market ending with over $83 million in non-washing trading volume and $63 million, respectively. The players naturally had to rethink their strategies.
Transition to a Withdrawal-Only Mode
Seeming to be a consequence of this, comes the Kraken’s announcement. The users will hence not be able to list, bid, or sell items any longer after today, i.e. November 27. Withdrawal of their respective assets will still be possible, shifting the marketplace to a withdrawal-only mode for the next 3 months before complete closure.
Kraken’s Reasoning behind the Announcement
The company clarifies that it aims to focus more on its forthcoming projects now. It needs freed-up resources for its new products and services which also include some unannounced initiatives that are in the process of development. It also added of informing the clients well in time and promising support in moving respective NFTs to Kraken wallets/self-custodial wallets of choice.
Kraken’s NFT Performance
Kraken will now be considered fully operational for almost 2 years since its launch in November 2022 on beta, when it featured more than 250 NFT collections without charging the buyers and sellers of gas fees on transactions. It may also be said that the company’s shutting down its NFT marketplace after operating for just over a year of launch.
Additional Possible Factors for the Closure
As per reports, the NFT trading volume of the crypto exchange company reached $471 million in August, which was the year’s lowest and that also marked a decline of 14% from July. The NFT trading activity was at $12.6 billion in Q1 of 2022, which declined to $3.9 billion in Q1 of 2024. Kraken further faced competition from niche marketplaces like Blur and OpenSea.
A Series of Negative Developments in the NFT Sector
OpenSea’s trading volume closed at $110.5 million in August that marked a 27% decline from the previous month despite November’s market recovery. OpenSea even received a Wells notice from the SEC (Securities and Exchange Commission) in late August, recommending an upcoming enforcement action for collectible tokens.
Conclusion
Not to forget, Kraken too is in a legal battle over crypto tokens traded/sold on its platform. It’s been targeted by the agency claiming the tokens were investment contracts under the Howey test that are subject to securities law. As the guidelines around such tokens still lack clarity, legal issues with the US regulators may also be considered one of the reasons behind the company’s shutting down of its NFT marketplace.
