NEW YORK: Kraken founder and chief executive officer Jesse Powell says the cryptocurrency exchange is working on a non-fungible token (NFT) marketplace that could appeal to customers who want to do more than just collect digital art.

       According to Powell, the marketplace would provide custody services and the exchange is considering a system where customers can use their NFTs as collateral to borrow funds against.

       “If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account. And if you want to borrow funds against that,” Kraken is working on a system to determine the liquidation value of the NFT deposited, he said.

       To Powell, who founded Kraken in 2011, this year will go down in the industry’s history as the year NFTs finally made it into the mainstream.

       The crypto ecosystem has seen a flood of new participants this year. And for many of them – from retail investors to corporate brands – their introduction into cryptocurrency has been through NFTs.

       “It’s kind of shocking. For the first 10 years of bitcoin, we were trying so hard to sell people on why they should be interested in bitcoin,” said Powell, explaining that the concept for NFTs existed in the early days of crypto when developers proposed “tagging” parts of the bitcoin blockchain with metadata.

       “I guess it took the right combination of events, something really popular like NBA Top Shots that really got people talking about it.”

       Although NFTs spent most of 2021 as collectors’ items and perhaps a way for people who got rich off their cryptocurrency gains to show off a very expensive Twitter profile picture, Powell is expecting the use cases for the tokens to grow next year.

       “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. — Bloomberg