Members of the United Kingdom’s Digital, Culture, Media and Sport Committee have opened an inquiry to hear from the public on the potential benefits and risks of nonfungible tokens, or NFTs, and blockchain on the country’s economy.
In a Nov. 4 announcement, the DCMS committee said its inquiry was related to the sudden growth of the NFT market, responding to fears the assets may be overvalued and at risk of the bubble bursting. According to the committee, NFT regulation in the U.K. is “largely non-existent,” with the DCMS planning to assess the assets ahead of a review by the treasury department.
What are the risks, and benefits of NFTs and the wider blockchain? We want to consider whether NFT investors, especially vulnerable speculators, are put at risk by the market and whether there is a need for regulation. For more details see https://t.co/C93XGBV7Ab pic.twitter.com/dvMTSwPYv1
— Digital, Culture, Media and Sport Committee (@CommonsDCMS) November 4, 2022
“NFTs swept through the digital world so fast that we had no time to stop and consider,” said committee chair Julian Knight. “Now that the market is veering wildly, and there are fears that the bubble may burst, we need to understand the risks, benefits, and regulatory requirements of this groundbreaking technology.”
The lawmaker added:
“Our inquiry will investigate whether greater regulation is needed to protect these consumers and wider markets from volatile investments. This inquiry will also help Parliament understand the opportunities presented by an exciting new technology which could democratise how assets are bought and sold.”
Citing examples including the NFT of Jack Dorsey’s first tweet, the committee encouraged users to submit evidence before its deadline of Jan. 6 for an analysis of both the benefits and risks of the technology on the economy. DCMS noted that global NFT sales were roughly $17 billion at the end of 2021, but fell by more than 90% from August 2021 to March 2022.
Related: The UK cannot afford to send mixed messages on crypto
The U.K. government has also moved forward on its Financial Services and Markets Bill, which aimed to broaden the country’s regulatory framework on stablecoins. Prime Minister Rishi Sunak, though in office less than two weeks, previously expressed support for the creation of a Royal Mint NFT and the U.K. establishing a central bank digital currency.