Rishi Sunak's NFT project is still going ahead despite market collapsing in crypto artwork

Rishi Sunak’s NFT project is still going ahead despite market collapsing in crypto artwork

27 October 2022

in NFT

Reading Time: 4 mins read

An “NFT for Britain”, promised by Rishi Sunak when he was chancellor, is still going ahead despite the near-collapse of the crypto artwork market, i has learned.

While serving as chancellor in April, Mr Sunak said that the Treasury would be leaping on the then popular NFT craze, which saw numerous brands and celebrities launch collections of crypto-art.

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NFTs – or non-fungible tokens – are digital tokens of artwork that use blockchain technology, similar to cryptocurrencies like bitcoin.

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Football clubs, players and online influencers have faced criticism for promoting NFTs, including “fan tokens” and collectible digital art, as they are widely seen as a risky form of investment.

Despite being behind deadline with no updates on the project six months after it was first announced, sources have confirmed that Mr Sunak’s NFT idea hasn’t been killed off – even though he is now Prime Minister.

At the time of the announcement, the Treasury had said Mr Sunak “asked the Royal Mint to create an NFT” that would be issued by the summer to “show the forward-looking approach we are determined to take towards crypto assets in the UK”.

The Royal Mint still holds responsibility for the development of the NFT. It has confirmed to i that it is “continuing to develop our first NFT range” but did not elaborate would that would look like.

“We will share further details in due course,” a spokesperson said.

The Treasury declined to comment on the status of the NFT project but sources told i it has not been quietly killed off, claiming the project is still in development.

The sources denied that any public funds had been wasted on a vanity project, as the costs of “designing and offering” the NFT would be met by the Royal Mint “entirely out of its own revenues”.

Opponents of the plan, including shadow Chancellor Rachel Reeves, had dismissed the move as a vanity project by the Silicon Valley-tied Mr Sunak, as he insisted the UK could become “a global hub for crypto-asset technology”.

But there have been no official updates since the announcement, despite the promise of a summer release. Meanwhile, the market for NFTs has near-collapsed in the months since – with NFT trading volume slumping from $17bn (£14.7bn) in January to just $466m (£402m) in September, according to Bloomberg.

Simon French, chief economist at the stockbroker Panmure Gordon, told i that the commitment to creating an NFT is “a particularly inefficient use of the Government’s time”.

“There’s a thousand and one other things for the Government to do,” said Mr French, who previously worked as chief of staff in the Cabinet Office.

He was critical of “the message it sends”, arguing that the Government’s involvement in NFTs “sends a signal to people of institutional advocacy”.

“It’s fine if you’re a multimillionaire who wants to put your assets in a broad suite – some in art and whiskey, some in shares and some in bonds,” he said.

However, he argued that those who are “less financially literate” are likely to take cues from the Government’s decision to get involved in the NFT market.

“What we know already is that some people shouldn’t be allocating a significant amount of their wealth to these things,” he said.

“It’s not a costly exercise, but the costliness comes down to how will we judge this market in five or ten years time, maybe sooner?

“What would the FCA [Financial Conduct Authority] do in terms of looking at whether the Government was acting in savers’ and investors’ best interests by putting their name to a highly speculative part of the financial ecosystem?”

The NFT is only one of several crypto-projects that Mr Sunak – who previously lived in the heart of Silicon Valley and held a US Green Card until earlier this year – opted to launch as chancellor.

In 2021, Mr Sunak told a financial industry conference he had set up a task force to explore the possibility of launching a new form of digital currency – a central bank digital currency (CBDC) dubbed “Britcoin”. Unlike cryptocurrencies, it would not change in value and instead be pegged to the value of pound sterling.

The Bank of England says it is still “looking at whether we should create a CBDC for the UK in the future” and will consult on the project “later in 2022”.

Meanwhile, the Financial Services and Markets Bill, currently before Parliament, contains several elements intended to bring crypto assets under regulatory control.

What are NFTs?

Similar to cryptocurrencies like bitcoin, NFTs are a form of digital token based on blockchain technology.

Unlike bitcoin, however, NFTs are unique in that there is only one token of each kind. The most popular form of NFTs are linked to artworks, including images, videos or music.

While proponents often tie this to ownership of the corresponding artwork, owning an NFT does not actually convey ownership of the assets’ copyright or usage rights.

Critics of NFTs say that they provide little intrinsic value and that the sector is rife with bad actors and scams.

While celebrities including Snoop Dogg, Ellen DeGeneres and Grimes are among those to have issued NFTs connected to their works as part of a digital gold rush, the value of many tokens has plunged drastically this year as the market for NFT transactions dries up.

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