- Since trade volumes are dropping and priorities are changing, Kraken has decided to shut down its NFT marketplace.
- Since November 27, 2024, users have no longer traded on the platform. Furthermore, the platform will be entirely deactivated by February 27, 2025.
- The company intends to reallocate its resources to new projects to better align with changing market trends.
Kraken has shifted its focus to new projects due to market challenges and waning interest in NFTs. The exchange plans to reallocate resources to new products and initiatives currently in development.
Launched in 2022, Kraken’s NFT marketplace failed to grow as expected, leading to a loss of confidence in its future. As a result, Kraken announced the closure of its NFT platform.
Starting November 27, 2024, the marketplace is in “withdrawal-only mode.” NFTs will no longer be listed, bid on, or sold by users. They have until February 27, 2025, to withdraw NFTs; on that day, the platform will completely shut down.
Kraken said the decision was driven by a need to prioritize other projects. “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,” a Kraken representative said.
The exchange has assured users that its team would assist them in transferring NFTs. They could smoothly move it to their Kraken Wallet or a self-custodial wallet.
“After February 27, 2025, the Kraken NFT marketplace will be permanently closed, and Kraken will no longer offer NFT custody services,” the platform stated, assuring users that support is available: “Our team is ready to assist with any questions or guidance needed for withdrawing NFTs. Please don’t hesitate to contact Kraken Support.”
Kraken’s sudden closure of its NFT marketplace marked a significant setback for the struggling digital asset collectibles sector. This move coincided with Kraken’s October launch of Ink, a DeFi platform.
This signaled a strategic pivot away from NFTs. The company seems to focus on more profitable and less regulation-heavy areas of the crypto industry.
Declining NFT Sales Lead to Kraken Marketplace Shutdown
The closure of Kraken’s NFT marketplace is just one of several tough decisions the company has made this year. In October, Kraken laid off 15% of its workforce after appointing a new CFO and co-CEO.
The NFT market, once thriving, has faced a sluggish year. According to crypto analytics platform Artemis, significant blockchains like Bitcoin, Ethereum, and Solana saw sharp declines in NFT trading volumes.
Earlier in the year, prominent figures such as billionaire Mark Cuban began selling off their NFTs, signaling the downturn. Current market conditions had an impact on Kraken‘s decision. This led it to concentrate its efforts on more potential growth sectors.
Since April 2024, NFT trading volumes have failed to surpass $200 Million. That showed slight improvement despite sporadic sales upticks, leaving even significant projects struggling.
So-callled news: @krakenfx is shutting down its NFT marketplace 😳
— Ofernan9000 (@Ofer_Nan) November 26, 2024
Wait, they had an NFT marketplace? 👀😂
How many of you are hearing about this for the first time?@KrakenNFT has never been in the NFT marketplace premier league, so this is probably the best decision! pic.twitter.com/0mNR1b524o
After a year of development, the marketplace struggled to maintain its initial momentum. It faced broader challenges due to a decline in NFT sales and market interest.
Kraken stated it will focus on projects that are better aligned with evolving customer needs. Before the closure, Kraken assured users it would assist in transferring their digital assets to Kraken Wallet or self-custodial wallets.
The company aims to maintain customer trust through strong support during the transition. It stayed true to its mission of simplifying the experience for NFT holders.
Market Challenges Increased by Regulatory Pressure
As regulatory scrutiny on the NFT market intensifies, platforms like Kraken are navigating how to address the growing challenges. The SEC issued a Wells notice to NFT marketplace OpenSea in late October.
That notice signaled potential enforcement actions. The primary concern is that NFTs may be classified as securities under U.S. law.
OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.
— Devin Finzer (dfinzer.eth) (@dfinzer) August 28, 2024
We're shocked the SEC would make such a sweeping move against creators and artists. But we're ready to stand up and fight.
Cryptocurrencies have long…
In recent years, many NFT projects and marketplaces have encountered similar challenges. For instance, Impact Theory and Stoner Cats settled with the SEC over alleged violations of securities laws.
These actions have caused some companies and creators to reconsider or even abandon the NFT space. As the NFT market grows, increasing regulatory scrutiny and workforce reductions reshape the industry.
With enforcement actions on the rise, businesses must reassess their strategies. Given the escalating legal complexities, Kraken’s decision to shut down its NFT marketplace is unsurprising.
For what reason is Kraken’s NFT Marketplace being shut down?
The NFT market has encountered several challenges. That includes declining trading volumes, oversaturation, plummeting values, and shifting consumer interests.
NFT sales peaked in 2022. However, it has since dropped significantly, with trading volumes sharply declining.
The market has also become overcrowded with new projects, many failing to sustain interest. Reports suggested that 98% of NFT collections saw minimal or no trading activity throughout 2024.
Only a tiny percentage of NFT drops in 2024 were profitable. Most drops lost over 50% of their value shortly after release. The average lifespan of NFTs has also shortened. While specific sectors, like gaming, remain resilient, the overall market struggles to maintain user engagement.
In response, Kraken plans to shift its focus to core areas like developing new tokens and enhancing its platform. This will allow Kraken to tap into emerging trends like meme coins and blockchain innovations.
Hard to believe what am reading but @krakenfx is closing their NFT platform now. LOL
— Tomas S 🥪 (@skantoshi) November 26, 2024
In Feb'23 I wrote to your PM, Kanj to embrace Ordinals ASAP as well as contacted other friends from the biz. Instead your top level mngmt invested into competition.
Kinda rekt, @jespow ? pic.twitter.com/pT1zbmppcd
By stepping away from the NFT market, Kraken gains the opportunity to explore promising sectors like DeFi and Web3 technologies. These areas align with the company’s goal of offering cutting-edge blockchain solutions and have demonstrated growth potential.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
