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DCMS launches inquiry into NFT ‘risks and benefits’

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The Department for Digital, Culture, Media and Sport (DCMS) has announced it’s launching an inquiry to establish the “risks and benefits” of non-fungible tokens (NFTs) and blockchain technology.

The NFT inquiry will focus on whether “vulnerable speculators” are put at risk by the market and examine if more regulation is needed before a Treasury review.

NFTs are digital identifiers, stored on the blockchain (much like cryptocurrencies), that are used to determine the ownership of digital assets. These are usually in the form of pieces of digital artwork.

“NFTs swept through the digital world so fast that we had no time to stop and consider,” said Julian Knight MP, chair of the DCMS Committee.

“Investors, especially vulnerable ones, are at risk of being swindled into buying NFTs whose value may tank on the moment of purchase.”

Prime Minister Rishi Sunak, during his time as chancellor, previously set out a plan to make the country a “global crypto asset hub“. Plans included the Royal Mint to create an NFT, which is yet to be created, and legislation to incorporate stablecoins into the UK economy

Knight added: “This inquiry will also help Parliament understand the opportunities presented by an exciting new technology which could democratise how assets are bought and sold.”