NFT-Backed Loans? Kraken Is On It!

Jesse Powell — the co-founder and CEO of major crypto exchange Kraken — suggested the firm plans to offer non-fungible token-backed (NFT) loans to the users of its upcoming NFT marketplace.

What Happened: Powell said during a recent Bloomberg interview that Kraken will launch its NFT marketplace in 2022 and NFT-backed loans will be among its features. He explained that "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."

See Also: CRYPTOPUNKS WATCHLIST: CELEBRITIES AND INFLUENCERS WHO OWN PUNKS

This is a rather bold move considering that only a small portion of all NFTs have a value high enough and allow for enough confidence that it will keep this value consistently enough to be useful as collateral for a loan.

Powell is confident that NFTs will see their utility grow next year since "phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs.”

The report follows late November reports about LoanSnap minting of its first seven residential mortgages as NFTs on its "smart loan" platform considering the borrower’s complete financial experience.