Rishi Sunak’s NFT project is still ongoing despite the market collapsing in crypto artwork
An “NFT for Britain”, promised by Rishi Sunak when he was chancellor, is still going ahead despite the near collapse of the crypto art market, I have learned.
While serving as chancellor in April, Sunak said the Treasury would jump on the then-popular NFT craze, which saw many brands and celebrities launch collections of crypto art.
NFTs – or non-fungible tokens – are digital tokens of artwork that use blockchain technology, similar to cryptocurrencies such as bitcoin.
Football clubs, players and online influencers have faced criticism for promoting NFTs, including “fan tokens” and collectibles, as they are seen as a risky form of investment.
Despite being late on deadline with no updates on the project six months after it was first announced, sources have confirmed that Mr Sunak’s NFT idea has not been killed – even though he is now Prime Minister.
At the time of the announcement, the Treasury had said that Sunak “asked the Royal Mint to create an NFT” that would be issued this summer to “demonstrate the forward-looking approach we are determined to take towards crypto-assets in the UK.” .
The Royal Mint remains responsible for the development of NFT. It has confirmed I that it is “continuing to develop our first NFT series”, but did not elaborate on what that would look like.
“We will share further details in due course,” a spokesperson said.
The Ministry of Finance refused to comment on the status of the NFT project, but sources said so I it has not been quietly killed off, claiming the project is still in development.
The sources denied that public funds had been wasted on a vanity project, as the cost of “designing and offering” the NFT would be covered by the Royal Mint “entirely out of its own revenues”.
Opponents of the plan, including shadow chancellor Rachel Reeves, had dismissed the move as a vanity project by Silicon Valley-linked Mr Sunak, as he insisted the UK could become “a global hub for crypto-asset technology”.
But there have been no official updates since the announcement, despite the promise of a summer release. Meanwhile, the market for NFTs has all but collapsed in the months since – with NFT trading volume falling from $17bn (£14.7bn) in January to just $466m (£402m) in September, according to Bloomberg.
Simon French, chief economist at stockbroker Panmure Gordon, said I that the obligation to create an NFT is “a particularly inefficient use of the government’s time”.
“There are a thousand and one other things for the government to do,” said Mr. French, who previously worked as a cabinet chief of staff.
He was critical of “the message it sends”, arguing that the government’s involvement in NFTs “sends a signal to people about institutional advocacy”.
“It’s fine if you’re a multi-millionaire who wants to place your assets in a broad suite — some in art and whiskey, some in stocks and some in bonds,” he said.
However, he argued that those who are “less financially savvy” are likely to take cues from the government’s decision to engage in the NFT market.
“What we already know is that some people shouldn’t be allocating a significant amount of their wealth to these things,” he said.
“It’s not an expensive exercise, but the cost comes down to how do we want to judge this market in five or ten years, maybe sooner?
“What would the FCA [Financial Conduct Authority] do when it comes to looking at whether the government acted in the best interests of savers and investors by putting its name to a highly speculative part of the financial ecosystem?”
NFT is just one of several crypto projects that Mr Sunak – who used to live in the heart of Silicon Valley and held a US green card until earlier this year – chose to launch as chancellor.
In 2021, Sunak told a financial industry conference that he had set up a working group to explore the possibility of launching a new form of digital currency – a central bank digital currency (CBDC) called “Britcoin”. Unlike cryptocurrencies, it will not change in value and will instead be pegged to the value of the pound sterling.
The Bank of England says it is still “looking at whether we will set up a CBDC for the UK in the future” and will consult on the project “later in 2022”.
Meanwhile, the Financial Services and Markets Bill, which is currently being considered by Parliament, contains several elements intended to bring crypto-assets under regulatory control.
What are NFTs?
Similar to cryptocurrencies such as bitcoin, NFTs are a form of digital token based on blockchain technology.
However, unlike bitcoin, NFTs are unique in that there is only one token of each type. The most popular form of NFTs is linked to works of art, including images, videos or music.
Although proponents often link this to ownership of the corresponding artwork, owning an NFT does not actually confer ownership of the assets’ copyright or usage rights.
Critics of NFT say that they provide little intrinsic value and that the sector is full of bad actors and fraud.
While celebrities including Snoop Dogg, Ellen DeGeneres and Grimes are among those who have issued NFTs linked to their works as part of a digital gold rush, the value of many tokens has plummeted this year as the market for NFT transactions dries up.
