Key Insights:
GameStop, one of the largest gaming retailers, has shut down its NFT marketplace as struggles to find a future for NFTs. The main reason provided by GameStop was that NFTs lacked regulatory clarity.
In blockchain gaming, NFTs have a huge utility in terms of in-game assets and modules(or levels) within the games. Several blockchain companies have already succumbed to crypto winter as of January 2024.
GameStop has announced that it will shut down its NFT Marketplace just after a 18 months of launch. The marketplace was launched in July 2022 and hosted several collections primarily related to blockchain games.
The news was shared by its website and tells the user that the marketplace won't be operational as of February 2, 2024.
The gaming retailer has already ended its NFT wallet in September 2023.
This year GameStop's profits had also dwindled as shown by its quarterly earnings report of Q3, 2023. The ending of their wallet program and then the NFT marketplace might be a profit-loss related decision for the company.
One of the primary reasons why we believe GameStop pulled the plug was that it would take a long time for NFTs to get regulatory clarity which currently only three cryptocurrencies enjoy, Bitcoin, Ethereum and Ripple.
Even forefront countries where crypto is highly established fail, to provide sufficient regulatory guideline on what NFTs would look like in terms of transfers, taxation, copyrights, etc. Also whether they would get treated as assets or as commodities (as was with Bitcoin).
The current bull market is primarily supporting the growth of large cap cryptocurrencies like Bitcoin, Ethereum, Shiba Inu, Cardano, etc. The NFT markets are still struggling to recover.
Lately , NFT markets have shown little recovery after August 2023. However, it still fails to match crypto markets which have made decent 18 month highs.
Though there has been a good shuffling of NFT markets where Blur leads the marketplace competition now and has completely replaced OpenSea. As of January 14, 2023, Blur has a market share of 73.9% by volume as compared to OpenSea's 19.6%.
However, there is a tough competition from Bitcoin Ordinals.
It is interesting that Bitcoin Ordinals which are similar to NFTs have attracted much greater attention. Till date more than 54 million Ordinals have been inscribed.
Though Bitcoin has been declared a commodity in the USA by the CFTC, yet, there appears to be no clarity whether Ordinals which are assets derived from Bitcoin can be termed as securities.
Even the MICA regulations of Europe do no cover NFTs if they have are offered at a fixed price.'
This poses a unique challenge where investors, project owners and NFT artists are worries about their future. Even if an NFT law comes into existence it might take several years of effort before it benefits anyone. We all know that it took more than 10 years for Bitcoin ETFs to come in the markets.
Though there are no laws on NFT regulations, yet multiple countries have placed them under different forms of taxation.
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