The DCMS Committee will hold an inquiry into the operation,
risks, and benefits of NFTs and the wider blockchain. MPs are
expected to consider whether NFT investors, especially vulnerable
speculators, are put at risk by the market. The inquiry may also
look into the wider benefits that NFTs and the blockchain could
provide the UK economy.
Non-Fungible Tokens (NFT) emerged into the popular consciousness
in March 2021. By the end of 2021, global NFT sales topped
$17billion. The boom of NFTs – digital assets whose uniqueness
and ownership is demonstrated and protected by the blockchain –
has led some to argue that a new, more democratic way of creating
and selling assets is developing.
This growth has also sparked fears that NFT speculation may be a
bubble, and that overvalued assets may be dumped on “greater
fool” investors. Fears have been compounded by drops in NFT
prices and sales: the NFT of Jack Dorsey’s first ever tweet
originally sold for $2.9million; when relisted at auction, the
highest bid was $280. Similarly, weekly NFT sales dropped by more
than 90% from August 2021 to March 2022.
NFT regulation in the UK is largely non-existent. The inquiry into NFTs and the
Blockchain is likely to examine whether more regulation is
needed, ahead of a Treasury review.
Chair of the DCMS Committee said:
“NFTs swept through the digital world so fast that we had no
time to stop and consider. 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.
Investors, especially vulnerable ones, are at risk of being
swindled into buying NFTs whose value may tank on the moment of
purchase. Our inquiry will investigate whether greater regulation
is needed to protect these consumers and wider markets from
volatile investments.
This inquiry will also help Parliament understand the
opportunities presented by an exciting new technology which could
democratise how assets are bought and sold.”
ENDS
Terms of reference
The DCMS Committee is inviting written
evidence on the following questions by 6
January 2023
1. Is
the UK’s light-touch NFT regulation sufficient?
2.
What are the potential harms to vulnerable people of NFT
speculation?
3. Do
blockchains offer security to British investors?
4.
What are the potential benefits to individuals and society of NFT
speculation?
