The United Kingdom government announced plans to mint its own non-fungible token on Monday as part of a quest to become a “global leader” in the cryptocurrency field.
City Minister John Glen stated at a fintech event in London that Finance Minister Rishi Sunak has urged the Royal Mint — the government-owned firm responsible for minting coins in the United Kingdom — to manufacture and issue the NFT “by the summer.” “There will be more details available very soon,” he added.
NFTs are digital assets that use blockchain, the technology that underpins many cryptocurrencies, to indicate ownership of a virtual item such as an artwork or video game avatar. They’ve acquired a lot of traction in the last year thanks to celebrity endorsements and corporate sponsorships.
According to Glen, the NFT initiative is part of a larger government attempt to “lead the way” in crypto. The minister stated a number of steps the UK will take to increase regulatory oversight of digital assets, including intentions to:
- Bring stablecoins into compliance with the UK’s existing electronic payment legislation.
- Consult on establishing a “world-leading regime” for regulating the trade of other cryptocurrencies, such as bitcoin.
- Request that the Law Commission consider the legal position of decentralised autonomous organisations, or DAOs, which are blockchain-based communities.
- Examine how decentralised finance (DeFi) loans and “staking,” which allows crypto users to earn interest on their funds, are taxed.
- Create a Cryptoasset Engagement Group, which will be led by ministers and include representatives from UK authorities and crypto companies.
- Investigate the use of blockchain technology in the issuance of debt instruments.
Glen stated, “We shouldn’t be thinking of regulation as a static, rigid thing.” “Instead, we should be thinking in terms of regulatory ‘code’ — like computer code — which we refine and rewrite when we need to.”
The government previously announced plans to develop a regulatory framework for cryptoassets and stablecoins, according to report.
Stablecoins, or cryptocurrencies whose value is derived from sovereign currencies such as the US dollar, are a rapidly rising but divisive phenomenon in the crypto industry. Tether, the largest stablecoin in the world, with a circulating supply of over $80 billion. However, it has been chastised for the lack of transparency surrounding the token’s reserves. Stablecoins will now be regulated in the United Kingdom by the government.
Glen said that the government was “widening” its scope to include other areas of crypto, such as Web3, a movement that advocates for a more decentralised internet based on blockchain technology.
“No one knows for sure yet how Web3 is going to look,” Glen said. “But there’s every chance that blockchain is going to be integral to its development.”
“We want this country to be there leading from the front, seeking out the greatest economic opportunities.”
The government’s NFT ambitions were met with scepticism by Mauricio Magaldi, global strategy director for crypto at fintech consultancy 11:FS. In an emailed reply, he claimed the decision “seems to be nothing more than a strategic PR-play.” But, he continued, “talk of the U.K. becoming a ‘crypto hub’ seems to hold much more promise.”
There are mixed signals
As policymakers around the world continue to take a closer look at the $2 trillion sector, industry insiders have been demanding for clarity on the United Kingdom’s position on crypto.
President Joe Biden of the United States signed an executive order last month pushing government-wide coordination on crypto regulation. The move was widely regarded as beneficial to the industry.
Meanwhile, politicians in the European Union recently voted against measures that would have jeopardised the future of crypto mining. They did, however, approve new restrictions prohibiting anonymous crypto transfers.
Regulators in the United Kingdom have taken a hard line on digital assets.
The Financial Conduct Authority has turned down the great majority of crypto companies that applied for registration, citing concerns that too many “financial crime red flags” are going unreported.
Last week, the FCA extended a vital deadline for crypto firms on a provisional register to acquire full permission, including Revolut and Copper. Copper has former UK finance minister Philip Hammond as an advisor.
After failing to make it onto the final register, some organisations, including Blockchain.com, B2C2, and Wirex, have been forced to shut down their U.K. crypto activities and relocate offshore. The FCA has only approved 33 companies.