Kraken co-founder and CEO Jesse Powell recently shared in an interview with Bloomberg News that the crypto exchange will launch a nonfungible token (NFT) market place that will enable users to borrow funds against their NFTs.

Powell explained that the company plans to enter the NFT space in early 2022 and hopes to add together the characteristic to determine the liquidation value of an NFT and whether it tin be put upwardly 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, standing, "nd if you want to borrow funds confronting that."

The value of NFTs, nevertheless, is all over the spectrum, and only a small percentage of token owners agree 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, stage iii is going to be functional uses of NFTs."

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

Kraken was founded in 2022 and has become 1 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.

Related: Nexo partners with Three Arrows Capital to launch NFT lending & fine art financing service

Kraken's announcement demonstrates how NFT-backed loans are becoming increasingly commonplace as more DeFi platforms, such equally Arcade and Nexo, are offering this new loan model. As Cointelegraph recently reported, Arcade closed a $15-million funding round in December as part of a broader effort to grow its offerings and concenter more than investors to its collateralized NFT platform.