UK drops plans to create NFTs

The UK has scrapped plans to create its own government-backed NFTs.

The British government first announced plans to create its own NFTs, produced by the Royal Mint, in April 2022. The plans were then enthusiastically supported by the then Chancellor, Rishi Sunak, who has since become Prime Minister.

However, the government has changed its mind after a longer consultation period, and the Treasury has now announced that it is “not going ahead with the launch” but will keep the proposals “under review”, according to a BBC report.

The head of the Treasury Select Committee – a cross-parliamentary committee that reviews the Treasury’s work – scoffed at the idea of ​​NFTs. “We have yet to see much evidence that our voters should put their money into these speculative tokens unless they are prepared to lose all their money,” she told the BBC.

The NFT bubble burst?

When the plans were first announced last year, the NFT bubble was already showing signs of bursting. Almost a year later, the momentum appears to have been completely drained from the market, which perhaps explains the UK government’s reluctance to go ahead with the planned launch.

At the time of the initial announcement, Rishi Sunak claimed that the NFTs would give the UK economy a boost. “We want to see [cryptocurrency] tomorrow’s businesses – 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,” Sunak added.

The NFTs were just one part of a series of initiatives designed to “make the UK a global hub for crypto-asset technology”. Other initiatives included the regulation of stablecoins and the creation of a “financial market infrastructure sandbox” to help firms innovate around cryptocurrencies. The Treasury also announced that it would examine ways to fine-tune the tax system to encourage the chalk bag market.

It is not clear whether any of these initiatives will now continue.

British digital currency

The dropped plans could also cast further doubt on plans to create a digital currency for the UK

Giving evidence to the Treasury Select Committee in February, Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England, said he felt it was more likely than not that the UK would require its own digital currency.

“There are many different motivations for having a digital pound,” he said. “Our fundamental motivation, and the reason we think it is likely to be needed, is to provide digital cash – the digital equivalent of Bank of England notes – for general payment purposes.”

However, he admitted that the Bank of England did not have the skills to launch the currency itself. “We hope by the end of this next phase to have the skills to go with private sector partners to the next stages, which will be to build a working prototype to test in a simulated environment, then test in a live environment, and then implementation,” he said. “The next phase is designed to put us in a position to do that.”