Leading video game retailer GameStop (GME) announced that it would discontinue support for its crypto wallets, a move that comes in the wake of heightened regulatory scrutiny in the United States. The wallets, which enabled users to manage both cryptocurrencies and non-fungible tokens (NFTs), will be removed from the market on November 1, 2023.
The company, which rolled out the wallet service around a year ago, has informed customers to access and recover their secret passphrase by October 1. For now, GameStop NFTs can still be managed through other compatible platforms, such as Metamask and WalletConnect.
The decision follows recent actions by U.S. regulators, including lawsuits against major crypto players like Coinbase and Binance, and delisting actions taken by trading platform Robinhood (HOOD). The regulatory crackdown has caused several companies to shift focus overseas as they wait for more definitive regulatory guidance in the region.
GameStop’s crypto stance and industry implications
GameStop’s hesitance toward digital assets has been evident for months. Former CEO Matt Furlong expressed a cautious outlook on crypto in a December 2022 earnings call, stating that while the company sees long-term potential in digital assets within the gaming world, it would not risk substantial stockholder capital in the crypto space. It is important to know that the retailer had already cut ties with at least six employees involved in blockchain projects a day before that call.
The uncertainty surrounding GameStop’s crypto operations is emblematic of a broader debate in the industry. The lines defining what constitutes securities within the crypto sphere are still blurred, leading to clashes between regulatory bodies such as the CFTC and SEC. Recent lawsuits by the SEC against Binance and Coinbase in June over alleged unregistered securities offerings have only added to the ambiguity.
GameStop’s pullback from crypto is likely to raise more questions about the regulatory landscape in the U.S., especially as the debate over crypto assets and securities continues to unfold. However, the company’s representatives did not provide detailed specifics regarding the regulatory uncertainty leading to this decision.
The move comes after significant efforts by GameStop to venture into the crypto and NFT space, including laying off multiple software engineers working on its crypto wallet as recently as December. In addition, the wallets allowed users to manage their assets through decentralized apps and facilitated transactions within GameStop’s NFT marketplace.