In a bid to become the global crypto hub and signal its commitment to a forward-looking approach to crypto technology and investment, the UK declared plans to issue NFT.
As the first step Rishi Sunak, Chancellor of the Exchequer, asked Royal Mint to mint and issue NFT by summer. The news was announced by John Glen, the Economic Secretary to the Treasury, at Innovate Finance Global Summit on Monday.
The announcement also included the British government’s vision for Stablecoins and distributed ledger technologies to be part of its strategy for its financial services industry.
NFTs are digital assets that use blockchain like a cryptocurrency representing ownership of a virtual item like an artwork or video game avatar. It gained popularity after being endorsed and adopted by celebrities and large corporations. It is now one of the most popular crypto products.
It is used as a speculative asset, leading many people to compare it to a Ponzi scheme. It claims to provide proof of ownership, but legal rights associated with it are uncertain.
As a result, there is no restriction on copying the underlying digital files. It doesn’t have proper copyright protection. It is also criticized for energy cost and resulting carbon footprint.
The concerns seem not to affect the government policy as it is part of the broader effort by the government to lead the way in crypto.
Other crypto policies that would follow this are, bringing in Stablecoins within the nation’s existing regulations on electronic payments, consulting a world-leading regime to regulate trade in other cryptocurrencies, and considering the legal status of blockchain-based communities called decentralized autonomous organizations, or DAOs, through the Law Commission.
To examine the tax treatment of decentralized finance loans and staking, enabling crypto users to earn interest on their savings. Explore the application of such technology in issuing debt instruments and establish a Cryptoasset Engagement Group, chaired by the minister and will include senior representatives from the FCA, Bank of England, and businesses.
The British government is presently focused on Stablecoins, whose price is pegged to fiat money, cryptocurrency, or exchange-traded commodities. The advantage it holds over other crypto entities is that assets outside the volatile crypto space stabilize their price and value. That makes it a fast-growing phenomenon, but controversy is associated with it is that it lacks transparency around the reserves that back the token.
The British government also shows an interest in widening its gaze into other aspects of the crypto sector, including Web3, a more decentralized version of the internet built on blockchain technology. They hope to lead in this field and not just be part of the new order but lead it, something the country is not being since the end of the First World War.
But not everyone is enthusiastic about this move. Experts consider it more of a PR stunt to attract more investors to fill the gap left by moving Russian oligarchs. But it also creates a sense of optimism as one of the largest economies in the world has started to recognize cryptocurrency beyond a modern technological fad.
Recently there has been a constant back and forth between the government and the industry as governments and regulators like the US are looking into expansion into the field. In contrast, others like the EU and FCA negatively approach it.