The UK government is going to launch a range of NFTs, the controversial digital ownership tokens that have been embraced by artists and technology-savvy investors but criticised by environmental campaigners for rapacious energy consumption.
What is an NFT?
A non-fungible token (NFT) is a cryptographic claim of ownership, similar to the deed to a house, that is encoded into a blockchain, meaning that it cannot be altered. Typically it is used to denote ownership of something physical or purely digital, which exists elsewhere. For instance, artists can sell ownership of a digital artwork as an NFT. Anyone is free to download a copy of that artwork but the 鈥渙wner鈥� is the person who has access to the appropriate NFT.
Why is the UK government getting involved?
John Glen, the economic secretary to the Treasury, who at the Innovate Finance Global Summit in London, said that the government wants the UK to be 鈥渢he very best place in the world to start and scale crypto-companies. The NFTs, which will be created by the Royal Mint and launch later this year, will be an 鈥渆mblem of the forward-looking approach鈥� that the government is taking on adoption of cutting-edge financial technology, said Glen.
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Doesn鈥檛 the Royal Mint make coins normally?
The Royal Mint produces the British pound coins, but also sells collectable items such as medals and commemorative coins. A spokesperson said in a statement that NFTs were a 鈥渘atural progression鈥� for the organisation.
Who will actually buy the UK鈥檚 NFTs, and how much will they cost?
At the moment it is unclear what exactly the owner or owners will be buying, and whether they will get any concrete ownership rights. The Treasury said only that an NFT was being developed, while the Royal Mint told New 杏吧原创 that it would actually be a 鈥渞ange鈥� of NFTs. Neither would give more details on what the NFTs would involve, how much they would cost or how many there would be. This makes it difficult to assess who would be interested in buying one.
What else is the UK planning to do?
Glen said the government is planning to allow stablecoins聽鈥� cryptocurrencies that are pegged to the value of existing currencies, rather than fluctuating with market forces 鈥� to be used for payments. But there is little detail yet on exactly where and how, after all, anyone is free to use them as payments already. The government will also formally regulate the trading of other cryptocurrencies like bitcoin, whose value isn鈥檛 linked to any physical asset.
Are all UK officials onboard?
Not everyone is keen on cryptocurrencies. 鈥淣ever in the history of commerce has there been an invention as hyped and misunderstood,鈥� said John Glen, the economic secretary to the Treasury, . On the same day, Bank of England governor Andrew Bailey said that cryptocurrencies are the .
What do other people think?
at FireCask, a UK marketing agency that works on NFT launches, says it is a move that will allow companies such as his to thrive. 鈥淲hilst some may be sceptical or surprised about this move, this is a great step towards mass adoption, which will be inevitable, as more understand the importance of digital ownership and loyalty on a global level,鈥� he says.
William Entriken, one of the , says that the plan may help the UK government tax cryptocurrencies. 鈥淐ompare that to today where very little crypto activity is taxed,鈥� he says. 鈥淭he role of good government probably should include reviewing trillions of pounds worth of unregulated assets and transactions and opening up a discussion with industry.鈥�
, a solicitor at Lawdit Solicitors, says there are risks. 鈥淚 take some five calls a day on this, largely from young people and they are keen to use NFTs and make their billions that way. Sadly most will get burnt,鈥� he says. 鈥淪ome NFTs will crash and many will be burnt, but in 10 years they will be here to stay and will be thriving on the blockchain as an established asset.鈥�
Are there any downsides?
The government admitted in its announcement that criminal use of cryptocurrencies is an issue, but that cryptocurrencies operating in the UK are now subject to money laundering regulations. It has also promised to look at the vast amounts energy consumed by cryptocurrencies. The UK will also hope to avoid the fate of El Salvador, which officially adopted bitcoin as legal tender and has seen glitches, fraud and problems making payments.
