The Treasury's Non-Functioning Token
(Credit: mundissima / Alamy Stock Photo)
4 min read
When the Treasury announced plans to launch its own non-fungible token, it caused a sensation on social media. Now, however, Tali Fraser hears the scheme may have hit the buffers
When news of a Treasury backed non-fungible token (NFT) was announced in April, it attracted ridicule on social media, with one economist suggesting it must have been intended as a late April fool and another asking, “what on earth is the point of this”. The fanfare around NFTs had already been on the decline and now, eight months since the announcement took place, there is still no sign of the infamous Treasury NFT – and, according to sources, it is unlikely to make an appearance any time soon.
Prime Minister Rishi Sunak asked the Royal Mint to issue NFTs during his time as chancellor. It was a sign John Glen, then economic secretary for the Treasury, claimed, of the intention to create a welcoming environment for crypto assets in the United Kingdom.
He said: “There is a genuine opportunity to build on our strengths in FinTech, seize the capitalist energy, which has already made UK financial services what it is, and use it to unleash the potential of crypto technologies.”
“This decision shows the forward-looking approach we are determined to take towards cryptoassets in the UK,” the Treasury confirmed in a tweet.
Back in April, Glen recognised the NFT’s creation: “[was] not going to happen overnight.” Sunak had asked the Royal Mint to create a token by the summer. What neither Sunak nor Glen may have considered was that it still would not have happened by the end of 2022. Treasury consensus is that with so much else on its plate at the moment, while the plans have not been cancelled, there is no real effort to progress them either.
A senior source said: “If there is no pressure from Andrew Griffith [current economic secretary for the Treasury], which there isn’t, and there is no pressure from the Chancellor Jeremy Hunt, which there isn’t, it will likely be stuck between officials for a little while longer.”
They added: “Treasury ministers realise that the real impact from crypto isn’t going to come from an NFT or a discord channel [the Treasury launched a server on the gaming chat app last month] for sweaty men living in their mother’s house, it is from investment and future use through industry.”
It will likely be stuck between officials for a little while longer
NFTs are digital assets, often artwork, whose uniqueness and ownership is verified and protected by the blockchain, a database of financial transactions kept on networked computers. They surged in popularity in March 2021 and by the end of the year global sales of NFTs had topped £14bn.
But the value of NFTs have since plummeted. Weekly NFT sales dropped by more than 90 per cent from August 2021 to March 2022, while the NFT of Twitter founder Jack Dorsey’s first ever tweet originally sold for £2.4m in March 2021 but when relisted at auction in April 2022 reached a bid of only £229.
A month after the announcement of the Treasury-backed NFT, Bank of England Governor Andrew Bailey even warned against purchasing NFTs, saying they had “no intrinsic value”.
“I’m going to say this very bluntly,” he added. “Buy them only if you’re prepared to lose all your money.”
Regulation of NFTs in the UK is recognised by the Commons’ Digital, Culture, Media and Sport (DCMS) Committee as “largely non-existent”. The DCMS committee announced last month that it would be holding an inquiry into the risks and benefits of NFTs to see whether investors are being put at risk by the market.
Yet the Treasury insists the plans have not been shelved and that it is still committed to producing an NFT. A spokesperson for The Royal Mint added: “We are continuing to develop our first NFT range. We will share further details in due course.”
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