GameStop, the prominent video game retailer, recently made an announcement that will shock crypto-enthusiasts. Due to the uncertain regulatory landscape in the United States, the company plans to withdraw support for its crypto wallets just one year after its launch.
The iOS and Chrome Extension wallets, which facilitated the management of cryptocurrencies and non-fungible tokens (NFTs) within decentralized apps, will be removed from the market as of November 1, 2023.
The announcement has been framed as a preemptive response to US regulators’ increasing scrutiny of crypto-related companies. In recent months, regulators have stepped up efforts to enforce rules and regulations on companies like Coinbase and Binance. Both have faced lawsuits from the Securities and Exchange Commission (SEC) in the wake of this intensified regulation. Trading platform Robinhood also found itself delisting tokens that were designated as securities in recent SEC lawsuits.
The decision marks a notable shift in the gaming giant’s approach to digital assets. A year ago, the wallets were launched as an integral part of GameStop’s move towards integrating blockchain technology into its operations, including facilitating transactions on its NFT marketplace. Now, this service is set to disappear, reflecting the wider impact of regulatory pressure on crypto-related ventures.
GameStop’s cautious stance on digital assets
GameStop’s decision follows a series of signals indicating the company’s cautious stance towards digital assets. During an earnings call in December 2022, the then-CEO Matt Furlong expressed his belief in the long-term potential of digital assets in the gaming world. However, he also clarified that the company was unprepared to risk significant shareholder capital in the space. This caution was reflected in the layoffs that followed, which included multiple software engineers working on the crypto wallet.
The lack of specific details about the “regulatory uncertainty” that precipitated the decision to halt the crypto wallet program further demonstrates the complexities of the current regulatory landscape. The ongoing debate between the Commodity Futures Trading Commission (CFTC) and the SEC over which crypto assets constitute securities adds to this uncertainty.
Customers of the soon-to-be-removed service are advised to write down or recover their secret passphrase before October 1, as those with access to their Secret Passphrase can still recover their account in any compatible wallet.
Implications and industry impact
The impact of this decision reverberates beyond just GameStop. It provides a clear example of the effects of the regulatory crackdown on crypto-related companies in the United States. As a result of the intensifying regulations, several firms have chosen to move overseas to focus on their operations in regions where regulatory clarity is more forthcoming.