UK Legislators Plan to Hold an Inquiry on NFT Regulation and Investment Risks
NFT regulation in the U.K. is “essentially non-existent,” according to the DCMS committee, and MPs intend to evaluate the assets before a review by the treasury department.
Seeking Public Opinion on NFTs
The UK’s Digital, Culture, Media and Sport Committee has launched an inquiry to gather public input on NFT investment risks. The committee is weighing the potential advantages and disadvantages of Non-fungible tokens, or NFTs, and blockchain technology for the nation’s economy.
In response to worries that the assets may be overvalued and at risk of the bubble collapsing, the DCMS committee announced on November 4 that their investigation was related to the fast expansion of the NFT sector. The committee would like to evaluate the assets before the treasury department does an assessment.
According to committee head Julian Knight:
“NFTs surged over the digital world so quickly that we had little time to pause and reflect. We need to grasp the risks, benefits, and legal requirements of this ground-breaking technology, especially now that the market is swaying dramatically and there are fears that the bubble may burst.”
What Did the Lawmaker Have to Say?
“Our investigation will focus on if regulation is necessary to protect individual consumers and larger markets from risky investments. This investigation will also assist Parliament in comprehending the possibilities offered by an innovative new technology that has the potential to democratize the buying and selling of assets.”
The committee urged users to submit data before the deadline of January 6 for an examination of both the advantages and risks of the technology on the economy, citing examples such as the NFT of Jack Dorsey’s first tweet. At the end of 2021, global NFT sales were estimated to be above $17 billion. However, between August 2021 and March 2022, they decreased by more than 90%.
The Financial Services and Markets Bill, which sought to expand the nation’s regulatory environment for stablecoins, has also advanced in the U.K. Despite having been in office for less than two weeks, Prime Minister Rishi Sunak has previously stated his support for the establishment of a Royal Mint NFT and a central bank digital currency in the UK.
Proposed UK Regulations Will Make Marketing Crypto Much Difficult
If the new proposed measure is signed into law, the U.K. might make it harder for cryptocurrency companies to market to customers inside its borders.
The Financial Services and Markets (FSM) bill committee accepted an amendment to a markets bill on Thursday to control cryptocurrency advertising and promotion. This bill can ultimately legalize cryptocurrencies as financial instruments.
Crypto supporters believe the legislation could be too onerous for a nation that has stated its intention to assist the digital asset sector.
What Are the Concerns?
They fear that relying on an approved authority to approve advertisements will require crypto companies to navigate a number of obstacles and incur large fees.
The U.K. Treasury, the financial branch of the government, announced in January that it intended to tighten the regulations covering crypto to enhance consumer safety. The Treasury aims to use this step to prevent risky and dishonest organizations from contacting local customers.
