- Kraken to discontinue NFT marketplace: Marketplace enters withdrawal-only mode on Nov. 27, offering clients three months to transfer assets.
- Market decline and competition weigh on NFTs: NFT trading volumes have fallen significantly, with market activity well below 2022 levels.
- Regulatory uncertainty impacts industry players: Legal challenges and unclear guidelines continue to pose risks to NFT platforms.
Kraken, a major cryptocurrency exchange, has announced the closure of its non-fungible token (NFT) marketplace, which launched just over a year ago. Starting November 27, the marketplace will enter a withdrawal-only mode, allowing users to transfer their assets. Kraken confirmed the decision in a statement, emphasizing its focus on new projects and initiatives.
According to Kraken’s email to clients, users will have a three-month period to move their NFTs to the Kraken Wallet or other self-custodial options. A company representative stated that the closure allows resources to be redirected toward “new products and services” under development.
Kraken’s NFT marketplace was introduced in June 2023, following a period of beta testing. It initially featured over 250 collections and did not impose gas fees on buyers or sellers during transactions. However, the platform struggled to gain significant traction, especially as the broader NFT market experienced a downturn.
NFT Sector Faces Declining Interest and Regulatory Challenges
The decision comes at a time when the NFT market continues to experience a prolonged decline. DappRadar data shows that NFT trading volume hit $471 million in August, marking a yearly low and a 16% drop from July. This is a sharp contrast to the $3.9 billion in trading activity during the first quarter of 2024, which itself was significantly lower than the same period in 2022.
Kraken also faced stiff competition from established platforms like OpenSea and Blur. OpenSea, for instance, saw a decline in trading volume to $110.5 million in August, down 27% from the previous month, further illustrating the challenges within the sector.
Adding to these difficulties, regulatory pressures have loomed over the NFT industry. The U.S. Securities and Exchange Commission (SEC) has sent notices to NFT platforms, signaling potential enforcement actions related to collectible tokens. While Kraken has not specified whether regulatory concerns influenced its decision, the company is currently entangled in legal proceedings with the SEC over whether certain crypto tokens on its platform qualify as securities.
As the NFT market remains under scrutiny and grapples with declining activity, Kraken’s pivot reflects broader industry struggles and the growing need to adapt to evolving market dynamics.
