The UK House of Commons Culture, Media, and Sport Committee has released a report warning soccer clubs against the use of fan tokens.
Non-Fungible Tokens (NFTs) and Fan Engagement
In a 30-page report, the committee explored the intricacies and challenges presented by non-fungible tokens (NFTs) in both the arts and sports sectors. Fan tokens are cryptocurrencies designed to provide benefits to fans of sports teams or music groups.
Fan tokens offer unique features such as the ability to vote on an athlete’s entrance music or select a team’s jersey, aiming to enhance fan engagement. However, the report highlighted criticisms of fan tokens, stating that they have not fulfilled promises of fan engagement and cryptocurrency stability. Concerns were raised that clubs may continue to promote fan tokens despite reservations among fan groups due to price volatility.
“We are (…) concerned that clubs may present fan tokens as an appropriate form of fan engagement in the future, despite their price volatility and reservations among fan groups,” the report said.
The committee emphasized the need for regulation and recommended that any measurement of fan engagement in sports, including football, explicitly exclude the use of fan tokens.
NFTs and Gambling Concerns
Furthermore, the report highlighted concerns about NFTs linked to sports clubs, drawing similarities to gambling. The committee previously suggested that retail trading of unbacked cryptoassets should be considered akin to gambling.
This raises questions about the regulation of NFTs and the potential risks associated with their use in sports and entertainment.
Regulating NFTs Internationally
The UK is not the only country addressing the regulation of NFTs. France, for example, is introducing the SREN bill, which aims to enhance digital security and demonstrate the nation’s proactive stance on emerging technologies like NFTs and cryptocurrencies.
The bill includes provisions specifically for games based on NFT and cryptocurrency technologies, differentiating them from traditional gambling based on financial commitment, element of luck, and potential financial gains.
Regulations for Web3 sports platforms are being implemented globally to ensure the protection of consumers and maintain the integrity of the industry.
