UK government has no idea how to value the NFTs it seized two years ago

UK regulators seized NFTs in 2022. Illustration: Andrés Tapia; Source: Midjourney

Nearly two years after British officials seized three non-fungible tokens in a tax fraud investigation, the nation’s tax authority is still trying to determine how to value the digital assets.

No further NFTs have been seized since the 2022 operation, and HMRC remains in the early stages of developing methods to appraise the worth of NFTs.

Her Majesty’s Revenue and Customs is “exploring options regarding the valuation [and] appraisal method for seized NFTs,” the agency told DL News in response to a Freedom of Information request.

The NFTs, seized alongside about £5,000, or $6,345, in cryptocurrency, were taken as part of an investigation into a £1.4 million VAT fraud scheme involving over 250 suspected fake companies.

First NFT seizure

At the time, the action marked the first NFT seizure in the UK. HMRC declined to comment on whether the three seized NFTs have been sold.

“Let this serve as a warning to those looking to hide money from the tax authorities,” Nick Sharp, the deputy director for economic crime at HMRC, said at the time of seizure. “We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”

The tax agency declined to divulge any further details on what options it’s exploring and how it custodies NFTs on grounds that such information “could allow opportunists to identify and undermine our compliance activities, prejudicing our ability to prevent and/or detect crime.”,

“Revealing our retention methods could increase the risk of criminals targeting HMRC staff or other parties in an attempt to recover the assets seized.

Revealing its tactics also “could allow criminals to explore techniques that could inhibit our ability to identify or seize them in the future,” HMRC said.

NFTs like those in the Bored Ape Yacht Club collection are typically valued based on a mix of rarity, cultural significance, and the whims of the ever-fluctuating crypto market.

Once the darlings of speculative investors and celebrities, NFTs have seen their market cool dramatically since their peak in 2021.