Crypto exchange Kraken is shutting down its non-fungible token (NFT) marketplace just over a year after its launch.
According to an email sent to clients and seen by Cointelegraph, the NFT marketplace will transition to withdrawal-only mode on Nov. 27, initiating a three-month withdrawal period before its complete closure. Kraken said the move will redirect resources to new products and services.
A spokesperson for Kraken confirmed the platform’s discontinuation in a statement:
“We’ve made the decision to close our NFT marketplace so we can shift more resources into new products and services, including unannounced initiatives in-development. Clients have been informed of the changes and our team will support them as they move their NFTs to their Kraken Wallet or a self-custodial wallet of choice.”
The exchange fully rolled out the marketplace in June 2023, following a few months of beta testing. At its debut, Kraken featured over 250 NFT collections without charging gas fees from buyers or sellers on transactions.
Kraken’s decisions come as the NFT market sees a downward trajectory in 2024. According to an industry report by DappRadar, NFT trading volume reached a yearly low of $471 million in August, a 16% decline from July. NFT trading activity reached $3.9 billion in the first quarter of 2024 from $12.6 billion during the same period of 2022.
Along with the market slump, Kraken’s platform also faced competition from niche marketplaces, such as OpenSea and Blur. In August, trading volume at OpenSea closed at $110.5 million, representing a 27% decrease from the previous month. While the market recovered in November, it still lags behind its peak of 2022.
Another negative development in the NFT sector came in late August, when the Securities and Exchange Commission (SEC) sent a Wells notice to OpenSea, suggesting an upcoming enforcement action around collectible tokens.
Kraken itself has been previously targeted by the agency. The company is currently in a legal battle over whether crypto tokens traded and sold on its platform were investment contracts under the Howey test and subject to securities laws. It’s unclear whether the shutdown of the NFT marketplace is related to potential further legal issues with US regulators, as such tokens still lack clear guidelines.
