“Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs,” said Powell. Using deposited NFTs as collateral on Kraken could be one of those uses, he said.
The push comes as larger competitors including Binance and FTX Exchange have already launched NFT marketplaces, while millions have signed up for Coinbase Global Inc.’s NFT waitlist. Kraken said its looking to enter the NFT space early next year. Adding to the competition is OpenSea, one of the largest marketplaces for non-fungible tokens, though that company does not custody assets.
While Kraken nearly doubled its customer base in the past year to 8.5 million, it’s still dwarfed by its larger peers. On Thursday, 24-hour trading volume on Binance’s spot exchange stood at around $US18 billion ($24.9 billion) at one point, while Coinbase’s was roughly $US3.7 billion ($5.1 billion). Kraken saw about $US1 billion ($1.4 billion)in trading activity in the same time period, according to CoinMarketCap.com data.
The amount is still a significant increase from prior years. Trading volume on Kraken jumped 420 per cent year-over-year as tokens including Bitcoin and Ether reached record highs and some meme-coins notched 5-digit returns.
In November, Kraken’s announcement that they would list the Shiba Inu meme-coin — after initially holding off from listing — sent the token up 30 per cent in one day. According to Powell, the exchange places tokens on a “short list” before deciding to list a coin.
TikTok will start allowing users to trade NFTs of some of its most popular videos, including from rapper Lil Nas X, pictured here in 2019.Credit:Invision
Tokens can land on the list for several reasons, like if they’re part of a new project that’s about to launch or if Kraken’s technical developers flag it. The exchange also takes customer interest into account whether deciding to place a coin on the short list.
“It could get there if we’re getting a ton of requests from customers, or Elon’s tweeting about it,” Powell said.
From there, the coin heads to a review committee made of lawyers, analysts, and engineers that assess how to classify the token, and determine the legality behind listing the coin in various regions.
For Powell, the decision to list the Shiba-Inu token was heavily rooted in customer interest.
“There’s not incredibly interesting new technology there or anything, it’s just largely community-driven interest. It’s basically a meme-coin that has the community’s attention, and sometimes you have to just list those,” said Powell.
Bloomberg L.P.
