The report is designed to complement our much wider programme of member work on New Digital Assets and Money, which includes work on CBDCs, stablecoins, cryptocurrencies, securities tokenisation and more.

This report has demonstrated just how varied the views of market participants can be on some of the core issues within the digital economy and digital assets ecosystem. Regulatory interest in these issues has remained high, and the landscape we see developing is one of continuing attention. It’s worth pointing out that there are some emerging areas of consensus, but also plenty of areas where the way forward is still unclear.

In the UK, the treatment of digital assets such as NFTs is a great example. The UK Jurisdiction Task Force (UKJT) published a Legal Statement on cryptoassets and smart contracts, the Law Commission of England and Wales published papers on digital assets, smart contracts, electronic trade documents, and other related topics, and HM Treasury (HMT) published its much-anticipated consultation on the future financial services regulatory regime for cryptoassets. The Department of Culture, Media and Sport (DCMS) has continued to be active: following its January consultation, it has now been hearing evidence at Committee level.

At a European level, the finalisation of the Markets in Crypto-Assets (MiCA) regulation has delivered final clarity for members that have business in the EU.

This report aims to build our market understanding, to deliver clarity on NFTs and the broader digital assets ecosystem and what is needed to ensure that an ethical and innovative market can flourish in the UK. Our report calls out how digital assets work, how they are regulated, how they can be used by financial institutions (to provide better infrastructure, to develop new products, and more), and how to interpret what can at times be confusing terminology.

So facing in to this complexity, we chose to work with a fantastic partner (one with deep expertise in digital assets and tokenisation) in international law firm CMS, to explore three big themes – understanding the overall landscape and how NFTs fit into the wider digital assets ecosystem; exploring their role and use in financial services; and, finally, considering the regulatory requirements and challenges. We’ve sought to give non-experts a tool to help them get going, and to give those from the TradFi side a view of the possible opportunities available in this technology.

Ultimately, engagement and investment by the traditional financial industry is what will serve to develop the UK’s position as a digital assets hub. Market practice and industry standards will develop further, as more financial institutions invest in blockchain technology. Furthermore, co-ordination and partnerships with existing industry and technical experts and lawyers will result in solutions being found and technical innovations being made to address current hurdles or concerns.

We also decided that a fitting output of our work should be, of course, an NFT. As a result, we minted one of the front cover. You can view it (on the Zilliqa blockchain) here: Address | Zilliqa Explorer | ViewBlock (and the token contract (in hashed form) is: 0x1810271eF0df8EB46f6bDc177d2De23848F11D8D (with thanks to Erika Federis, one of the CMS crypto team lawyers, who minted the NFT for us).