Chancellor also unveils plans to regulate so-called stablecoins, but critics accuse under-fire minister of ‘poorly judged gimmick’
The Royal Mint is to create a government-backed non-fungible token.
The UK’s currency manufacturer, which operates as a company wholly owned by HM Treasury, has been asked by chancellor of the Exchequer Rishi Sunak to create an official state digital token to be ready for launch this summer.
NFTs are digital files which come embedded with a unique signature intended to bestow authenticity or ownership – albeit seemingly without any of the powers or benefits of copyright that would usually apply. This is evidenced by the sale for $2.9m of the first ever tweet, posted by Twitter founder Jack Dorsey in 2006. The message’s new ownership does nothing to prevent the tweet’s ability to be freely viewed or shared online – such as by being embedded in news articles (see below).
The new owner, Malaysian blockchain entrepreneur Sina Estavi, recently put the tweet back up for sale for $48.3m (£37m).
Among the other high-profile examples to have enthused advocates and baffled sceptics is the Bored Ape Yacht Club collection of NFTs. The algorithmically generated illustrations have attracted many celebrity owners – such as Snoop Dogg, Serena Williams, Madonna, and Gwyneth Paltrow – many of whom have spent an amount equivalent to hundreds of thousands of dollars on cartoon pictures of apes.
It is not known what form the UK government’s NTF will take, nor what its purpose will be or how much it might be traded for. The Treasury said only that it is intended to serve as “an emblem of the forward-looking approach the UK is determined to take” in regard to crypto-assets.
This will include regulating so-called ‘stablecoins’ – which are cryptocurrencies that peg their value to traditional currencies or commodities, such as the US dollar or the value of gold. The government intends to pass legislation that will mean stablecoins that are already being accepted as a form of payment will be brought “within the payments regulatory perimeter”.
The Treasury also intends to create a Cryptoasset Engagement Group “to work more closely with the industry” and a sandbox environment in which, free of the usual regulatory constraints, financial firms can “experiment and innovate” with technologies such as blockchain.
“It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” said Sunak, who this week has faced criticism over his wife being non-domiciled in the UK for the tax purposes.
The chancellor added: “We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term. This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.”
The government’s public show of support for the potential of the crypto sector comes shortly the publication of figures which showed regulator the Financial Conduct Authority had been alerted to 6,372 suspected crypto frauds last year. This figure is double the 3,143 alerts received in 2020 – and more than the cumulative total of the potential frauds in the prior four years combined.
just setting up my twttr
— jack⚡️ (@jack) March 21, 2006
In response to the news of a government NFT, shadow economic secretary to the Treasury Tulip Siddiq said: “This poorly judged gimmick shows how out of touch Rishi Sunak is with the cost-of-living crisis facing families, pensioners and businesses.”
Speaking to PublicTechnology sister publication PoliticsHome, a number of crypto industry figures welcomed the intention to include the sector in regulation – while cautioning that government attempts to promote virtual currencies should be accompanied by efforts to ensure the public understood the intricacies and risks of what remains, in large part, a volatile market.
Charley Cooper, chief communications officer at blockchain R3 warned said that much of the general public “may not understand the risks” of NFTs and cryptocurrencies.
“Crypto volatility and lack of stability means that everyday investors may not understand the risks involved and end up getting hurt,” he told PoliticsHome.