DCMS Consultation On The Regulation Of NFTs – Charities & Non-Profits

The Digital, Culture, Media and Sport Committee (DCMS) is
holding an inquiry into the operation, risks, and benefits of
non-fungible tokens (NFTs) and the wider blockchain, with a
particular focus on the risks to vulnerable
spectators. DCMS notes that NFT regulation in
the UK is largely non-existent, and inquiry will examine whether
more regulation is needed. The inquiry opened on 3 November 2022
and submissions are open until 6 January 2023.

DCMS is inviting written evidence on the following
questions:

1) Is the UK’s
light-touch NFT regulation sufficient?

2) What are the potential harms to vulnerable
people of NFT speculation?

3) Do blockchains offer security to British
investors?

4) What are the potential benefits to
individuals and society of NFT speculation?

An NFT is a claim to ownership of a unique, often
digital, item. This claim to ownership which can be bought and sold
uses blockchain technology which accurately establishes individual
ownership of the underlying item. NFTs are classified as
‘unregulated tokens’ and are not regulated beyond
potentially being caught by the UK Advertising Codes.

NFTs are a form of investment which some charities may have
considered investing in. They have been used in other ways too.
Jack Dorsey, the former CEO of Twitter, auctioned
an NFT he owned (which depicted his first ever
‘tweet’), donating the proceeds of $2.9 million to Give
Directly’s Africa Response, and the World Wildlife Fund are
currently selling ‘non-fungible animals’ in a bid to
raise awareness and funds for the conservation of ten endangered
species.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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