UK Authorities Warn Against Fan NFTs
Are you a fan of a British sport club that issues non-fungible tokens? Then we’ve got some so-so news for you.
The UK’s Culture, Media and Sport committee has warned clubs against using NFTs to “exploit” fans.
In their new report “NFTs and the Blockchain: the risks to sport and culture, the New Financial Conduct Authority (FCA)” elaborates on the NFTs, their rise to fame and vice versa.
And touches upon utility tokens also known as fan tokens.
It states that the recent plateaus in professional sports leagues’ revenues and the zero-risk nature of crypto revenue for clubs has paved the way for collaboration between professional sport and crypto companies.
“However, the unique relationship between clubs and fans means that fan speculation on sport-based crypto assets carries a real risk of financial harm to fans and reputational harm to clubs,” the report reads, adding that “We are also 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.
Accordingly the authors of the report recommend that any attempt to measure fan engagement in sports has to omit the use of fan tokens.
They also demand issuing a warning that reads not to invest "unless you're prepared to lose all the money you invest".
"Clubs are promoting volatile crypto-asset schemes to extract additional money from loyal supporters, often with promises of privileges and perks that fail to materialize," said Dame Caroline Dinenage, chair of the CMS committee.
She added that "Fan token schemes must not be used as a substitute for meaningful engagement with supporters."
The report comes at a time when Socios partnered with Tottenham Hotspur sparked a backlash from fan groups, who said that fan engagement with the club should not cost money and pointed out the risks of losing money through buying cryptocurrency.
Previously, GN news reported about the Web3 football and sports conference.
