Will the UK Government Start Cracking Down on NFTs?

You might not be familiar with the term NFT, but that doesn’t mean you haven’t actually come across these. “Non-fungible tokens”, NFTS are ways of storing data, and these one of a kind assets can be bought and sold much like anything else.

A Look At NFTs

NFT’s are a way of owning the original rights to a digital image – so for example, if you own the rights to a popular image that goes viral then you could earn from this. The reason they are called non-fungible is that there is no exact value to them. We know how much £20 is worth and we know that swapping a £20 note for two £10 notes is a fair swap; with NFT’s there is no exact value – it is impossible for someone to say exactly how much one is worth.

The UK Government Investigation Into Sorare

Sorare is a fantasy football league that uses NFT collectable cards within its game. The cards need to be bought and people can use them to play fantasy games to earn prizes such as Cryptocurrency. This type of gaming is reasonably new and as such, there aren’t any solid regulations or restrictions surrounding it. However, the UK Gambling Commission has recently been criticised for not being quick enough to regulate these upcoming trends and as such, have announced that there will be an enquiry into how it works and whether any regulations are needed.

Fantasy football as a concept isn’t new and in fact, the UK Gambling Commission has commented on them as far back as 2017 to say that it could be something that they need to consider looking into in the future. Fans of Sorare say that their fantasy leagues don’t fall under any regulations because it is free to enter, but the truth is that you can gamble within the game to win prizes and as such, the UK Gambling Commission have at least a small interest in what is going on.

Should It Be Compared To Traditional Gambling?

There are arguments for both sides of the coin on this one, which is probably why the UK Gambling Commission will be looking into things and making a firm decision. On one hand, it is free to enter the fantasy football league and therefore gambling away real money is not a requirement when it comes to taking part. However, on the flip side, you can gamble away real money and for a game where people under the age of 18 can take part that might not be ideal.

Although various types of gambling are allowed within the UK, they are all regulated and restricted. One of the main reasons behind having regulations in place is to ensure that everyone can play within a fair gambling environment. So for example, online casinos must display the odds of winning and game and these must be accurate. You can’t just announce a big cash prize game with no chance of anyone actually winning it. With NFT’s, loot boxes and other microtransactions being introduced to games there are not the same requirements. This means that you could be paying to purchase an NFT without a real chance that what they say is on offer actually exists. This is massively unfair and likely to be something that is regulated should any regulations come into play.

Of course, with online gambling there is also a requirement for operators to carry out ID and affordability checks; in order to make sure that everything is carried out safely and correctly. Sorare and other similar platforms currently don’t have any obligation to carry out such checks; which could leave vulnerable people open to being exploited.

Cryptocurrency

Although NFTs are different to Cryptocurrency, it can be compared in some ways due to the fact that it is a digital product. We already know that governing bodies throughout the world are starting to look at what they might need to do to regulate the trading of these assets. However, one of the biggest positives for many about Cryptocurrency is the fact that it is unregulated and therefore untraceable. Digital NFT products might not be quite the same as this, but the fact that governing bodies and commissions are starting to look at digital products and what their involvement might need to be goes to show that NFTs and similar products are under the watchful eye of the government already, even without official regulations in place.

The Future of NFT and Online Gambling

We are seeing a shift in the way that online gambling works, with things like NFT and loot boxes becoming more popular. Betting with PayPal has been an option for consumers for years now and Cryptocurrency is also becoming more widely accepted. These changes are most definitely something that gambling commissions across the globe are going to need to keep up with. We know
that it was in the 1960s that gambling regulations first came into play within the UK; so it stands to reason that these will have changed over the years. As the way we bet and gamble changes, so does the need for the regulations behind these. They would have been adjusted when online gambling first took off and they have been adjusted again recently with the increase in popularity for placing bets online.

It is impossible to say with any real certainty what the future of NFT will look like, much like Cryptocurrency it is something that is currently growing and developing. One of the issues will be that NFT isn’t a UK product nor is it something that is bought and sold exclusively within this country.

This makes regulations more difficult because people can find loopholes to get around any restrictions that you put in place. However, as much as we are uncertain what the regulations and restrictions will be – we can be certain that there will be measures put in place in the future; simply to safeguard those that do opt to dabble in investing in these digital products.