The UK House of Commons Culture, Media, and Sport Committee has issued a report cautioning soccer clubs about the utilization of fan tokens. The committee’s 30-page report delved into the complexities and challenges posed by non-fungible tokens (NFTs) in both the arts and sports industries.
Fan tokens are cryptocurrencies specifically created to offer benefits to supporters of sports teams or music acts, such as the ability to vote on an athlete’s entrance music or choose a team’s jersey.
Despite their intended purpose, the report raised concerns about fan tokens, asserting that they have failed to deliver on promises of enhanced fan engagement. This warning reflects a growing awareness and scrutiny of the use of blockchain and cryptocurrency-related products in the sports and entertainment sectors.
The committee has voiced apprehension that clubs might persist in endorsing fan tokens as a viable means of fan engagement, notwithstanding their price volatility and reservations expressed by fan groups. The report stated, “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.”
In response to these concerns, the committee suggested that any assessment of fan engagement in sports, including the anticipated regulation of football, should explicitly exclude the incorporation of fan tokens.
Additionally, the report raised red flags about NFTs tied to sports clubs, drawing attention to perceived similarities with gambling. This underscores the ongoing debate surrounding the regulatory framework for digital assets and their intersection with the sports and entertainment sectors.
The committee had previously put forth the notion that retail trading of cryptoassets without backing should be likened to gambling, emphasizing the potential risks associated with such activities.
In recent developments, the UK has been actively working on regulations pertaining to non-fungible tokens (NFTs). A cross-party committee in the country recently urged the government to engage in collaboration with NFT marketplaces to address issues of copyright infringement.
The committee presented a set of recommendations, advocating for the establishment of a code of conduct to protect creators and address concerns related to the use and trading of NFTs. This highlights the ongoing efforts to navigate and regulate the evolving landscape of digital assets, especially within the context of intellectual property and consumer protection.
Countries Are Implementing Regulations for Sports Platforms
Internationally, several countries are actively working to implement regulations for Web3 sports platforms. France is a notable example, where the SREN bill is being introduced to bolster digital security and showcase the nation’s proactive approach to emerging technologies like NFTs and cryptocurrencies. Often dubbed the “Sorare law,” the bill is presently under review by the National Assembly.
Sorare, a French company recognized for its fantasy sports game utilizing free cards or NFTs, took a significant step last year by reaching an agreement with the Autorité nationale des jeux (National Gaming Authority) to avoid being classified as gambling.
The SREN bill incorporates provisions specifically tailored for games based on NFT and cryptocurrency technologies. It distinguishes Web3 games from traditional gambling based on three key factors: financial commitment, the element of luck, and the potential for financial gains. This regulatory move reflects the global effort to establish clear frameworks for the evolving landscape of blockchain-based sports and entertainment platforms.