The DCMS House of Commons Committee will hold an inquiry into the operation, risks, and benefits of NFTs and the wider blockchain. MPs are expected to consider whether NFT investors, especially vulnerable speculators, are put at risk by the market. The inquiry may also look into the wider benefits that NFTs and the blockchain could provide the UK economy.

The Committee says that Non-Fungible Tokens (NFT) emerged into the popular consciousness in March 2021. By the end of 2021, global NFT sales topped $17billion. The boom of NFTs, which are digital assets whose uniqueness and ownership is demonstrated and protected by the blockchain, has led some to argue that a new, more democratic way of creating and selling assets is developing.

This growth has also sparked fears that NFT speculation may be a bubble, and that overvalued assets may be dumped on “greater fool” investors. Fears have been compounded by drops in NFT prices and sales: the NFT of Jack Dorsey’s first ever tweet originally sold for $2.9million; when relisted at auction, the highest bid was $280. Similarly, weekly NFT sales dropped by more than 90% from August 2021 to March 2022.

NFT regulation in the UK is largely non-existent. The inquiry into NFTs and the blockchain is likely to examine whether more regulation is needed, ahead of a Treasury review.

The inquiry is currently accepting written evidence on questions set out in a call for evidence. The deadline for responses is 6 January 2023. To read the Committee’s press release and for a link to the inquiry page and the call for evidence, click here.