UK Lawmakers Will Hold Inquiry to Explore NFT Regulation

U.K. lawmakers want to hear what the public thinks about regulating non-fungible tokens (NFT) that they fear are often overvalued.

The Digital, Culture, Media and Sport Committee (DCMS) that consists of members from different political parties launched an inquiry on Thursday on the operation, risks and benefits of NFTs, digital assets on a blockchain that represent ownership of virtual or physical items.

NFT's have garnered attention from celebrity endorsements, while the popularity of the virtual world that allows people to buy and sell these tokens, the metaverse, only pumped their value. By the end of March 2021 global NFT sales topped $17 billion according to a statement. Though, weekly NFT sales have since fallen more than 90% from August 2021 to March 2022, it added.

Now U.K. members of Parliament are afraid that NFT speculation may be a "bubble." An example the committee raised was the NFT of Jack Dorsey’s first tweet that initially sold for $2.9 million but when it was re-listed at auction the highest bid was $280.

“Now that the market is veering wildly, and there are fears that the bubble may burst, we need to understand the risks, benefits, and regulatory requirements of this groundbreaking technology," chair of the DCMS Committee, Julian Knight, MP, said in the statement.

The U.K. is forging ahead with its plans to regulate the crypto sector. It recently added amendments that would recognize crypto as a regulated activity and would ensure that the ads of firms which are not fully authorized to operate in the country can be restricted.

The deadline for the inquiry is Jan. 6.

The Digital, Culture, Media and Sport Committee was not available for comment when contacted by CoinDesk.

Read more: Proposed UK Rules Will Make Advertising Crypto a Lot Harder, Industry Warns