Kraken decides to shut down its NFT Marketplace

In an email to clients, Kraken confirmed that the platform will enter a withdrawal-only phase on November 27. Users will have a three-month window to transfer their NFTs before the marketplace shuts down completely. The exchange indicated that the decision aligns with efforts to allocate resources to new and developing projects. 

A Kraken spokesperson stated that the closure is part of wider strategy that will allow them to prioritise resources for new products and services currently in development. Kraken is currently assisting clients in transferring their NFTs to Kraken Wallet or external self-custodial wallets.

Shifting landscape for NFTs and increased competition 

Kraken’s NFT marketplace, which officially launched in June 2023 after a beta testing phase, featured over 250 collections and exempted buyers and sellers from gas fees. However, its closure reflects a series of challenges facing the NFT sector. 

According to Cointelegraph citing a DappRadar report, the NFT market has experienced a significant decline in 2024, as trading volumes fell to USD 471 million in August, marking a 16% drop from July and a sharp contrast to the USD 12.6 billion recorded in the first quarter of 2022. Despite a slight recovery in November, activity remains far below peak levels. 

Kraken’s marketplace also faced competition from specialised platforms such as OpenSea and Blur. OpenSea’s trading volume, for example, dropped to USD 110.5 million in August, a 27% decline from the previous month. The NFT sector has additionally faced regulatory uncertainty. In late August, the Securities and Exchange Commission (SEC) issued a Wells notice to OpenSea, suggesting potential enforcement actions against collectible tokens. 

Kraken itself has been under regulatory scrutiny, including ongoing legal proceedings about whether certain tokens traded on its platform constitute securities under the Howey test. While it remains unclear if regulatory concerns influenced Kraken’s decision, the lack of clear guidelines for NFTs adds to the challenges in the space.