DCMS consultation on the regulation of NFTs

The Digital, Culture, Media and Sport Committee (DCMS) is holding an inquiry into the operation, risks, and benefits of non-fungible tokens (NFTs) and the wider blockchain, with a particular focus on the risks to vulnerable spectators. DCMS notes that NFT regulation in the UK is largely non-existent, and inquiry will examine whether more regulation is needed. The inquiry opened on 3 November 2022 and submissions are open until 6 January 2023.

DCMS is inviting written evidence on the following questions:

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?

An NFT is a claim to ownership of a unique, often digital, item. This claim to ownership which can be bought and sold uses blockchain technology which accurately establishes individual ownership of the underlying item. NFTs are classified as ‘unregulated tokens’ and are not regulated beyond potentially being caught by the UK Advertising Codes.

NFTs are a form of investment which some charities may have considered investing in. They have been used in other ways too. Jack Dorsey, the former CEO of Twitter, auctioned an NFT he owned (which depicted his first ever ‘tweet’), donating the proceeds of $2.9 million to Give Directly’s Africa Response, and the World Wildlife Fund are currently selling ‘non-fungible animals’ in a bid to raise awareness and funds for the conservation of ten endangered species.