Crypto Exchange Kraken's New NFT Marketplace Will Issue Loans

Kraken founder and CEO Jesse Powell said in a recent interview with Bloomberg that the cryptocurrency exchange will launch a non-fungible token (NFT) marketplace where users can use their NFTs to borrow funds.

Powell explained that the company plans to enter the NFT space in early 2022 and hopes to add a feature to determine the liquidation value of NFT and whether it can be used as loan collateral.

“If you deposit a CryptoPunk on Kraken, we want to be able to reflect its value in your account. And if you want to borrow money against it,” Powell said.

However, the value of NFTs is widespread, with only a small fraction of token owners holding digital collectibles worth the equivalent of one CryptoPunk, which has a base price of 66.9 ETH, or $273,673 as of this writing.

According to Powell, the utility of NFTs will explode in the next year:

“The first stage is speculation, the second stage is buying art and supporting artists, and the third stage will be the functional use of NFT.”

Additionally, Kraken recently acquired Staked, an infrastructure platform that enables non-custodial cryptocurrency staking, to attract new investors. Kraken customers can now earn cryptocurrency rewards and yields while retaining control over their digital assets.

Founded in 2011, Kraken has become one of the world's largest cryptocurrency exchanges, topping the list for average liquidity, trading volume and digital asset reserves, according to CoinMarketCap.

Kraken’s statement suggests that NFT-backed loans are becoming more common as more DeFi platforms such as Arcade and Nexo are offering this new lending model. As Cointelegraph recently reported, Arcade closed a $15 million funding round in December as part of a broader effort by the company to scale its product and attract more investors to its collateralized NFT platform.

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