John Glen, economic secretary to the UK treasury, recently announced plans for the Royal Mint to produce its first non-fungible token (NFT), with plans for it ‘to be issued by the summer’.
NFTs are certainly in vogue. The technology – which we’ve covered before – serves largely as a non-interchangeable unit of data that can be sold and traded on the blockchain (a type of digital ledger). The technology essentially allows for a unique and verifiable token to be created for any real-world asset, like property or art, as well as for digital assets.
So why is the government moving to mint its own NFT?
According to Glen, Rishi Sunak himself requested the treasury mint an NFT – reportedly as an indication of the government’s supportive stance towards both this technology as well as the heavily associated cryptocurrency technologies used to trade said NFTs.
As well as this, the government announced its plans to create a so-called ‘stablecoin’ – a cryptocurrency tied to the value of fiat currency – which it plans to use as part of its payment framework. This will be done as part of an attempt to bring cryptocurrencies more into the mainstream; to increase and validate their use.
Furthermore, the UK government will be assessing the legal status of decentralised autonomous organisations (DAOs). These are groups of people who enter into a contract with eachother to reach an agreed-upon goal – usually tied to making or raising money. These groups don’t have a single leader like a CEO – hence the decentralised part of their name – but rather vote on actions collectively on the blockchain.
All these moves serve to solidify the UK government’s commitment to what it perceives to be future of fintech. But not everyone is feeling so optimistic.
In the UK, the Financial Conduct Authority has been active in trying to regulate the cryto space for a number of years. All crypto companies operating in the UK, for example, now have to register with the appropriate authorities, therefore subjecting them to strict anti-money-laundering requirements. To date, 33 crypto companies have been fully registered in the UK, or just about 30% of the over 100 companies to apply since 2020.
Further to this, Andrew Bailey – governor of the Bank of England – proclaimed crypto to be the “front line” for scammers. This, unfortunately, has been proven correct time and time again by grifters promoting get-rich-quick coin opportunities that serve only to make them money while bringing considerable losses to those who invested.
If there’s one thing this government has proven itself adept at, it’s sending mixed messages – and this foray into the cryptosphere is no different.
To some, these moves could be seen as prudent. It makes sense to invest and regulate at the early stage of technological innovation – especially one that has as many nuances and use cases as the crypto-NFT ecosystem.
Others, however, may argue the government’s actions are perhaps a little hasty. The technology, though well known, is still very much in its infancy and many large questions marks still hang over its usability, security, and efficiency.
A lot can be said about the technology’s energy consumption – which we will cover in another blog – and this is certainly one of the biggest detractors from the tech. However, the issues currently present are likely to be ameliorated as the technology matures.
It is hard to say whether the UK government’s move Is prudent or knee-jerk; time will ultimately tell. It will, however, be interesting to see just what sort of NFT the government will mint – and who will buy it?