The UK parliament has initiated an inquiry into NFTs to assess their potential benefits and market risks, with the likelihood of exploring more regulatory requirements. The Digital, Culture, Media and Sport (DCMS) Committee members from the UK Parliament said that the move comes amid the current NFT market growth. In an announcement yesterday, the lawmakers added that the market growth has “sparked fears” about the NFT bubble bursting.
Let’s take a closer look at the UK parliament’s NFT inquiry.
Why has the UK parliament launched an NFT inquiry?
On Friday, the DCMS committee announced an inquiry into the operation, risks, and benefits of NFTs as well as blockchain technology. The lawmakers added that NFT regulations in the UK are “non-existent.” Hence, the current NFT inquiry will likely explore the requirement for more regulations, especially to protect “vulnerable” investors.
“NFTs swept through the digital world so fast that we had no time to stop and consider,” said Chair of the DCMS Committee, Julian Knight MP. “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.”
Fears of NFT bubble bursting
The DCMS committee also noted the fears mounting from the recent drop in NFT sales and pricing. As an example, they cited the steep drop in the price of Jack Dorsey’s first tweet. While the piece had originally fetched $2.9million, it only received a $280 bid when relisted for auction recently.
“Our inquiry will investigate whether greater regulation is needed to protect these consumers and wider markets from volatile investments,” Knight added. “This inquiry will also help Parliament understand the opportunities presented by an exciting new technology which could democratise how assets are bought and sold.”
NFTs, crypto, and the UK
To be sure, this is not the first time that the UK government has looked into the wider crypto and NFT market. Last month, for instance, the UK government amended its Financial Services and Markets Bill, aiming to become a global cryptocurrency hub. Essentially, the bill seeks to broaden the country’s regulatory framework regarding cryptocurrencies. It also introduced a new term “Digital Settlement Assets” in place of “crypto assets”.
It’s worth noting that the UK government had also announced plans to release NFTs via the UK Royal Mint. In fact, Prime Minister Rishi Sunak previously supported the idea of a Royal Mint NFT while he was the Chancellor of the Exchequer. He was also supportive of central bank digital currencies.
“We want to see the businesses of tomorrow — and the jobs they create — here in the UK,” Sunak said at the time. “By regulating effectively, we can give them the confidence they need to think and invest long term.”