Kraken's new NFT marketplace will be used to offer loans.

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Beginning in 2022, according to Jesse Powell, the exchange will evolve into a marketplace for nonfungible tokens and NFT-backed loans.

In a recent interview with Bloomberg News, Kraken founder and CEO Jesse Powell said that the crypto exchange will create a nonfungible token (NFT) marketplace that will allow customers to borrow dollars against their NFTs.

Powell stated that the company intends to join the NFT industry in early 2022 and hopes to provide a function that will allow users to calculate an NFT's liquidation value and whether it can be used 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," said Powell. "And if you want to borrow funds against that."

The value of NFTs, however, is all over the spectrum and only a small percentage of token owners hold a digital collectible valued for as much as a CryptoPunk, whose floor price is 66.9 Ether (ETH) or $273,673 at the time of publication.

According to Powell, NFT utility will explode next year:

“Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs.”

Additionally, Kraken recently acquired Staked, an infrastructure platform that allows for non-custodial crypto staking, in an effort to attract new investors. Kraken clients will now be able to earn crypto rewards and yield while retaining control over their digital assets.

Kraken was founded in 2011 and has become one of the largest crypto exchanges worldwide, ranking among the top in terms of average liquidity, volume and digital asset reserves, according to data from CoinMarketCap.

As additional DeFi platforms, such as Arcade and Nexo, provide this new lending model, Kraken's announcement highlights how NFT-backed loans are becoming more frequent. Arcade secured a $15 million investment round in December, according to Cointelegraph, as part of a larger push to expand its offerings and attract additional investors to its collateralized NFT platform.
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