Commons committee to recommend giving yellow card to fan tokens
A Government committee is calling for fan tokens and crypto promotion in sport to be kicked into touch.
The Culture, Media and Sport Committee, headed up by Conservative MP Dame Caroline Dineage, said it believes digital asset promotion in sport was not only damaging to the reputation of sports clubs, but also puts supporters at risk of financial harm.
The cross-party Commons scrutiny group is, by all accounts, preparing to urge the Government to put in place a system to protect organisations and consumers from risks associated with digital assets.
It is understood particular attention is being paid to fan tokens and non-fungible tokens (NFTs).
NFTs are now being widely used across sport, particularly in football, where the blockchain technology can allow assets like tickets, images and videos to guarantee provenance with a unique digital identity.
Fan tokens, now common in the Premier League and major football leagues around the globe, allow fans to invest in their clubs as well as gain access to exclusive merchandise and rewards.
“Traditional regulatory regimes have failed to protect both creatives and consumers caught up in the volatile new crypto world,” reported Caroline Dineage.
“Artists are at risk of seeing the fruits of their hard work pinched and promoted without permission while fraudulent and misleading adverts add an extra layer of jeopardy for investors involved in what is already an inherently risky business.
“The Government must make sure that everyone in the crypto chain is working to properly protect consumers and the rights of creators.
“In the world of sport, clubs are promoting volatile crypto asset schemes to extract additional money from loyal supporters, often with promises of privileges and perks that fail to materialise.”
One of the world’s biggest fan token platforms – Socios – has responded to the committee’s initial findings with a reminder of what its bosses believe are the benefits to supporters.
“Fan token holders received more than 24,000 matchday tickets and over 1,000 items of merchandise last season, and continue to engage with their club in a unique new way,” a statement said.
“Fan tokens offer new and complementary benefits to clubs’ traditional fan engagement beyond the boundaries of geography, and unlike NFTs, are regulated by the Financial Conduct Authority.”
It is understood the committee will be submitting its report next week, recommending that fan tokens and crypto promotion in sport is fully examined.