Numerous prominent South Korean retail companies, such as Lotte and Hyundai, are making their exit from the non-fungible token (NFT) sector, signifying a significant change in their digital strategies.
This decision comes as a response to a noticeable slowdown in the NFT market, prompting these companies to shift their focus back to their core business strengths.
Lotte Home Shopping, the e-commerce division of retail giant Lotte, recently announced the discontinuation of its NFT shop platform. Initially launched in May 2022, the platform operated for only two years before Lotte revealed its closure on June 12, with operations coming to an end on July 2.
The NFT shop, integrated within the Lotte Home Shopping mobile app, was originally part of the company’s efforts to develop a metaverse platform. Notably, Lotte’s NFT Shop was unique in that it utilized fiat KRW as the transaction currency, making it more accessible to non-crypto users.
The company had expanded its NFT offerings by introducing collections featuring its corporate character Bellygom, collaborating on projects with virtual influencer Lucy, and tying up with the popular 2022 horror movie “The Witch: Part 2. The Other One.” Lotte had also been working on enabling secondary NFT sales on Opensea, the largest NFT trading platform globally.
However, with the recent closure, Lotte Home Shopping is completely stepping away from the NFT sector. The remaining NFT business interests, including the Bellygom NFT, will be transferred to Daehong Communications, a crypto startup under the Lotte Group.
In a similar vein, Hyundai Department Store, another major retailer, is also withdrawing from the NFT space. Launched in the same year as Lotte’s platform, Hyundai’s NFT wallet services provided customers with various incentives like discounts and free gifts, which are now being discontinued as the company exits the market.
Meanwhile, Shinsegae, another significant player in the South Korean retail landscape, has notably reduced its NFT offerings. An industry source disclosed that many retailers had eagerly entered the NFT business but are now scaling back their operations due to the slowing momentum in the market.
The insider further mentioned, “Instead, they are concentrating on enhancing the competitiveness of their core business sectors.”
The recent trend of retail giants exiting the NFT markets coincides with South Korea’s evolving stance on NFTs. Notably, the country’s top financial regulator is moving to classify specific NFTs as virtual assets, requiring businesses issuing these NFTs to report them to the South Korean government.
In a separate incident, a South Korean bank staff member embezzled $7.5m to invest in cryptocurrencies, showcasing the growing interest and risks associated with digital assets.