Kraken Founder and CEO Jesse Powell recently shared in an interview with Bloomberg News that the crypto exchange will launch a non-fungible token market (NFT) that will allow users to borrow funds against their NFTs.
Powell explained that the company plans to enter the NFT space in early 2022 and hopes to add the function to determine the liquidation value of an NFT and whether it can be offered as collateral for a loan.
"If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account," Powell said. "And if you want to borrow funds against that."
However, the value of NFTs is across the spectrum and only a small percentage of token owners have a digital collectible that is valued as much as a CryptoPunk, the minimum price of which is 66.9 Ether (ETH) or $ 273,673 at time of publication.
According to Powell, the NFT utility will explode next year:
"Phase one was speculation, phase two is buying art and supporting artists, phase three will be functional uses of NFTs."
Further, Kraken recently acquired Staked, an infrastructure platform that allows participation in non-custodial cryptocurrencies, in an effort to attract new investors. Kraken clients will now be able to earn crypto rewards and performance while maintaining control over their digital assets.
Kraken was founded in 2011 and has grown into one of the largest crypto exchanges in the world. classification among the top in terms of average liquidity, volume and reserves of digital assets, according to data from CoinMarketCap.
Related: Nexo Partners with Three Arrows Capital to Launch Art Financing and Loan Service NFT
Kraken's announcement demonstrates how NFT-backed loans are becoming increasingly common as more DeFi platforms, such as Arcade and Nexo, offer this new loan model. As Cointelegraph recently reported, Arcade closed a $ 15 million funding round in December as part of a broader effort to grow its offerings and attract more investors to its guaranteed NFT platform.
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