GameStop to stop support for its crypto wallets due to ‘regulatory uncertainty’

2023/08/02 Innoverview Read

Dive Brief:

  • GameStop plans to end its support for its cryptocurrency wallets “due to the regulatory uncertainty of the crypto space.” The retailer said it will remove its wallets, which operated through iOS and Chrome browser extensions, from the market on Nov. 1.

  • The retailer’s decision comes about a year after announcing plans to launch its digital asset wallet, which allowed users to send, store, receive and use cryptocurrency and non-fungible tokens.

  • GameStop advised in a brief note at the top of its crypto wallet website that all customers should verify they have access to their Secret Passphrase by Oct. 1, which will allow them to recover their account in a compatible crypto wallet.

Dive Insight:

GameStop Wallet allowed users to maintain “full control” of crypto and NFT assets. 

Ahead of the launch last spring, former CEO Matt Furlong said in a letter to stockholders that the company’s efforts and interest in crypto had begun the previous year with unspecified investments “to insert GameStop into the blockchain gaming and cryptocurrency worlds.”

Furlong said the company had created a blockchain team, established partnerships and begun development of an NFT marketplace, which represented a $41 billion addressable market at the time. “Given our distinct connectivity to gamers, we have a unique opportunity to be a conduit between developers, publishers and consumers as gaming shifts from consoles to the metaverse and other new frontiers,” Furlong said.

GameStop said it partnered with blockchain platform Immutable X and Digital Worlds NFTs Ltd. in January 2022. Under that agreement, IMX became a technology partner and platform for the company's NFT marketplace. 

Digital Worlds was committed to granting up to $100 million in IMX tokens to creators of NFT content and technology. In addition, Digital Worlds also agreed to provide up to approximately $150 million in IMX tokens to GameStop upon the achievement of certain milestones.

The retailer’s NFT marketplace launched in July 2022 and said at the time that it planned to expand its “functionality to encompass additional categories such as Web3 gaming, more creators and other Ethereum environments.”

But signs of trouble emerged before the end of last year. GameStop enacted layoffs that impacted several engineers, including an employee who said they worked in the "crypto space." Furlong was fired in June and the company named Ryan Cohen as executive chairman. Cohen took an activist stake in GameStop in late 2020 and pushed the company's management and board at the time to transform the company from a brick-and-mortar retailer into a technology company.

It was unclear Wednesday if GameStop’s NFT grant or wallet development milestones were met. The company did not immediately respond to a Wednesday request for comment from Retail Dive seeking more details about the discontinuation of the company’s blockchain and crypto services, including how many people worked on the crypto and wallet team, and what aspects of the regulatory environment contributed to the decision drop its initiatives.

The in-game NFT market is positioned to grow from $3.64 billion in 2022 to more than $15 billion by 2027, according to a January report from S&P Global Market Intelligence. Yet, according to InsideBitcoins, NFT sales fell 30% in July to a trading sales volume of $531 million.

(Copyright: RetailDive GameStop to stop support for its crypto wallets due to ‘regulatory uncertainty’ | Retail Dive)