As the Royal Mint prepares to create its very first non-fungible token (NFT), the UK Government has announced plans in tandem with the launch to position the UK as a global leader of all things cryptocurrency.
Chancellor Rishi Sunak has recently cited new plans to transform the UK into an international centre for cryptocurrency and has asked the Royal Mint to create its very first NFT.
The UK’s vision to become a global hub for cryptoasset technology was set out in a speech by the Economic Secretary to the Treasury, John Glen at the Innovate Finance Global Summit this week.
Although there is a range of initiatives at play here, the Chancellor will turn his attention towards stablecoins, a form of digital asset whose value is often flagged by its association with fiat currency; rather than the natural fluctuations in the market.
Because of this trait, stablecoins are often viewed as less volatile than their crypto-counterparts and is it because of this feature that Sunak has announced his intention for them to be reconsigned as an official form of payment through the provision of appropriate legislation.
“It’s my ambition to make the UK a global hub for cryptoasset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country,” comments Sunak. “We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long-term.
“This is part of our plan to ensure the UK financial services industry is always at the forefront of technology and innovation.”
In conjunction with the soon-to-be established regulatory framework, the government is to establish a financial market infrastructure (FMI) sandbox, which will allow firms and start-ups to explore transactions based on the cryptoasset, and to further develop their own forms of payment infrastructure.
The sandbox will seek to specifically test the readiness of distributed ledger technology (DLT), a form of decentralised technology that allows for information to be shared, updated and accessed across various locations and touchpoints. The government are to initiate a research programme to explore the feasibility and potential benefits of using DLT for sovereign debt instruments.
In addition to this, the move will consolidate key figures in the regulatory and crypto space into the Cryptoasset Engagement group. Such a group will work to advise the government on key areas of improvement within the ever-changing crypto industry.
What does Sunak want with an NFT?
The Royal Mint has been tasked with making a form of asset never before seen in its 1,136-year history. Unlike cryptocurrencies and the aforementioned stablecoins, NFTs are viewed as more of a collector’s item than an actual, feasible form of payment.
NFTs bring ownership to a specific form of digital art. These are generally not transferable in the same way as currency and cryptocurrency are, but are rather seen as a way to flaunt either wealth, interests or both.
For this reason, Rishi’s request for the Royal Mint to deliver one of these assets has been viewed as rather questionable; especially in light of the fact that he has plunged many millions of people into poverty after his spring statement failed to cushion the blow of soaring inflation.
Details of this move are scarce, and all we know so far is that some form of NFT project will come into fruition “this summer”. The details of what the NFT will represent, or even if there will be more than one being minted, are still unknown, but it is unlikely that such an NFT will be created with the sole focus of generating funds for the exchequer.
The process of minting an NFT isn’t necessarily rocket science, but it’s not for the inexperienced either. To date, the Royal Mint has created a grand total of zero NFTs, leading some to question how the Royal Mint is actually going to pull off the feat, and to what end the end-product will be utilised.
Although once again we emphasise that the exact details of this move are few and far between, the purpose of a Royal Mint NFT will ultimately be to drive the UK government to the heart of the digital revolution.
Debbie Wosskow, founder at AllBright, speaks of speculation, tokenisation and the wider strategy when regarding the latest announcement: “This week, the Treasury announced it has asked the Royal Mint to create a non-fungible token, or NFT, as part of a wider strategy to firmly position Britain at the cutting edge for new technologies by launching its own crypto asset. With the Government now doubling down on its involvement in Web3, it should be clear that NFTs are not simply a fad.
“Despite this, there’s still a high level of scepticism and mistrust in the industry. While a government-led initiative can be a real gamechanger in how people interact with NFTs and the metaverse, it’s also important to recognise the impact that tokenisation can bring to the wider economy.
“Through NFTs, we can generate another way of raising funds, similar to traditional government-backed bonds and provide greater accessibility for people wanting to invest in something that is both innovative as well as reliable. The amount of money generated from NFTs could be a major boom to national economies as well as an opportunity for other businesses to mirror this approach, raising funds through NFTs and generating practical executions from trading digital assets.”
