As scrutiny around digital assets grows in what appears to be the crypto winter, UK lawmakers are taking a precautionary step to hold an inquiry to explore NFT regulation. The Digital, Culture, Media, and Sport (DCMS) committee in the House of Commons announced that it will study the wider blockchain technology that underpins NFTs.
The committee is opening an inquiry to help parliament whether greater regulation is needed to protect consumers and wider markets from volatile investments such as NFTs.
The DCMS committee stated that MPs will be responsible for considering whether NFT investors, especially vulnerable speculators, are put at risk by the market. The inquiry would also probe into the benefits associated with NFTs and what role blockchain could play in the UK economy.
Though the NFT market boomed reaching $17 billion worth of sales by the end of 2021, fears sparked that NFT speculation may be a bubble ready to burst. The concern grew when NFT prices and sales dropped later in the year.
For example, the NFT of Jack Dorsey’s first-ever tweet originally sold for $2.9 million, but when relisted at auction, the highest bid was $280. Julian Knight MP, Chair of the DCMS Committee, said, “NFTs swept through the digital world so fast that we had no time to stop and consider.”
He also emphasized that, at present, the market is veering wildly, and there are fears that it may dwindle to nothing. Hence, lawmakers are understanding the risks, benefits, and regulatory requirements of this groundbreaking technology.
With celebrity endorsements and metaverse plans rapidly being developed, vulnerable investors are at risk of buying NFT under the influence. The inquiry is focused on protecting these consumers and wider markets from volatile investments. This step will ensure whether more regulation is needed ahead of a Treasury review.
If we look into previous crypto affairs, the UK has always embraced the decentralized culture seeing the potential. Most recently, the UK adopted blockchain technology to store documents. Now, the UK is forging ahead with its plans to regulate the crypto sector.
