Sunak’s government-backed NFT a “poorly-judged gimmick”, Labour says

Labour’s Tulip Siddiq has declared that a request made by Rishi Sunak for the Royal Mint to create a non-fungible token, or NFT, as part of an effort to make the UK a “global cryptoasset hub” shows that the Chancellor is “totally out of touch”.

Commenting on the decision, announced by the Treasury on Twitter earlier this afternoon, the Shadow Economic Secretary described the move as a “poorly-judged gimmick, coming days after the biggest energy price hike in history”.

Siddiq argued that the decision to create a new NFT now is an “insult to families across the UK who are struggling to get by” as households this week faced increases in taxes and energy bills amid a worsening cost-of-living crisis.

“Yet again, Rishi Sunak has shown how totally out of touch he is with the cost of living crisis facing families, pensioners and businesses. We need a serious strategy to safely harness the potential of crypto technology. This isn’t it,” she added.

The government is expected to announce a number of measures for the cryptocurrency sector, which currently features volatile currencies such as Bitcoin. A government-backed NFT would act as a so-called ‘stablecoin’ – a cryptocurrency that has its value pegged to an existing, traditional currency.

Commenting on the decision today, Sunak said: “We want to see the businesses of tomorrow – and the jobs they create – here in the UK, and by regulating effectively we can give them the confidence they need to think and invest long term.”

NFTs are a token of ownership attached to a blockchain. The tokens use the unique blockchain value to confer ownership of an entity, either tangible or virtual – with pieces of digital art, photographs or music popular. Some NFTs have recently soared in value to millions of pounds.

The global NFT market has seen a significant rise from $100m in 2020 to reach $25.5bn (£19.4bn) last year, according to DappRadar. Some economists have warned that the growth in the market is characteristic of a speculative bubble. Proponents of the NFT market cite its potential as a powerful and innovative new tool.

The Treasury has not specified what image or object the Royal Mint’s NFT would confer ownership of, whether there are plans to create more in the future or whether NFTs could be used to generate funds for the government.

Living standards are currently falling at the fastest rate since the 1950s. The energy price cap, council tax and National Insurance contributions all rose at the start of April. An estimated 1.3 million people, including 500,000 children, are expected to be pushed into poverty over the next few months.

Labour launched its local elections campaign last month. Keir Starmer criticised the government for what he called a “pathetic” response to the cost-of-living crisis, telling those present at the event in Bury that “Britain deserves better”.