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GameStop (GME) Wallet shutting down as company cites 'regulatory uncertainty of the crypto space'

GameStop Wallet support will end on November 1, 2023.

Asif Khan

August 2, 2023 11:30 AM

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GameStop's management team is still attempting to turn around the embattled video game retailer as the company continues to face serious secular headwinds to its core brick and mortar retail business, and one moonshot effort born out of the short squeeze of 2021 has been a crypto wallet and NFT Marketplace. The company announced today that GameStop Wallet will be shutting down on November 1, 2023. The main reason given by GameStop in the company's statement is "regulatory uncertainty of the crypto space."

Here's the full statement posted on the GameStop Wallet website:

Due to the regulatory uncertainty of the crypto space, GameStop has decided to remove its iOS and Chrome Extension wallets from the market on November 1, 2023.

We advise that all customers ensure that they have access to their Secret Passphrase by October 1, 2023. Any customer with access to their Secret Passphrase has the ability to recover their account in any compatible wallet.

Information on how to obtain your Secret Passphrase can be found on our help site.

As the Shacknews staff discussed on The Dump back in March 2022, GameStop took a risk with entering into the NFT Marketplace, and the company's timing could not have been worse. That being said, the crypto experiment was not a "bet the company" moment. It appears that the decision-makers at the company who backed this attempted pivot into NFTs and crypto have left in the past few months with former CEO Matt Furlong being let go in June, and yet another CFO exiting the company just last month.

Taking a dump in the metaverse. pic.twitter.com/sAb5W4ZBbx

— Ryan Cohen (@ryancohen) December 27, 2021

The focus of U.S. regulators like the SEC and CTFC probing and suing other cryptocurrency companies seems to have created enough risk for Executive Chairman Ryan Cohen to call off the attempted pivot. GameStop Wallet and NFT Marketplace revenue were never material to financial results at the company, but we do know that hundreds of millions of dollars that were raised in 2021 on the back of the retail investor-driven short squeeze has been squandered on the poorly-timed crypto bet. Today's announcement did not include any information on the fate of GameStop NFT Marketplace, but the shuttering of GameStop Wallet can't be taken as a good sign.

While the company is attempting to save face by blaming the shuttering of GameStop Wallet on the regulatory environment for crypto, it's hard to ignore the fact that the NFT Marketplace and Wallet simply never took off. The timing of the launch of GameStop's crypto products was a year late, and the broader NFT market in 2023 simply isn't worth the effort. The lack of NFT adoption from any major game developers after some floated out ideas of entering the space in 2021 was likely the final nail in the coffin for GameStop's cryptocurrency pivot.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long GameStop via GME shares (hedged with put options)

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.