UK Committee Issues Stark Warning Against Fan Tokens in Sports Clubs

In a comprehensive 30-page report, the UK House of Commons Culture, Media, and Sport Committee has raised significant concerns over the growing trend of soccer clubs adopting fan tokens. These digital currencies, designed to enhance fan engagement with sports teams and music groups, have come under scrutiny for their perceived failure to deliver on promises of increased fan interaction.

The report highlights the potential risks associated with fan tokens, including their price volatility and reservations among fan groups. It cautions against presenting these tokens as a viable form of fan engagement in the future.

The committee’s key recommendation is that any measurement of fan engagement in sports, including in forthcoming football regulations, should explicitly exclude the use of fan tokens.

James Newman, Chief of Corporate Affairs at Chiliz, the company behind Socios, a leading fan token issuer, offered an alternative perspective. He emphasized that when a fan purchases a token, they are essentially gaining access and asserting their membership rights to a specific fan community. Newman suggested that such transactions should be regulated as either commodity purchases or financial transactions.

The report also draws attention to the potential gambling-like aspects of NFTs linked to sports clubs, echoing previous sentiments that trading unbacked cryptoassets should be treated akin to gambling.

Andrew Griffith MP, Economic Secretary to the Treasury, expressed reservations about potential discrepancies with international standards, particularly those set by entities such as the EU.

Globally, several countries are actively working on regulations for Web3 sports platforms. France, in particular, is taking a proactive stance with the SREN bill, aimed at bolstering digital security. Often referred to as the “Sorare law” by the media, this bill is currently under review by the National Assembly. French company Sorare, known for its fantasy sports game, offers players the option to use either free cards or NFTs, which can be resold on the secondary market.

As the debate around fan tokens and NFTs in sports continues to unfold, stakeholders in the industry are closely watching for potential regulatory developments both in the UK and on the international stage.

 

Source: decrypt

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