A new report from the UK House of Commons Culture, Media and Sport Committee has issued a stark warning against football clubs turning to so-called fan tokens.
This recommendation is highlighted in the 30-page report which addresses the complexities and challenges faced by NFTs in both the arts and sports domains.
Fan Tokens are cryptocurrencies used to provide fan benefits to sports teams or music groups. Some examples in the past have seen token holders vote on the music that an athlete will play outside or which jersey the team will wear.
The reality is that the UK committee is concerned about these provisions.
“Clubs' use of fan signs has been criticized for not delivering on the promise of fan engagement,” the report read. “We are concerned that clubs may offer fan signs as an appropriate form of fan engagement despite their price volatility and reservations between fan groups.”
As a result, the committee members conclude the report by saying, “Any measurement of fan participation in sports, including future football regulations, should clearly exclude the use of fan tokens.”
In response to the criticism, Chiles head of corporate affairs, James Newman, the firm behind Socios, one of the main backer token issuers, offered an alternative perspective.
“When a fan buys a token from us, they're essentially gaining access and securing membership to a specific fan community,” he told Decrypt. “At the moment this is focused on Socios, but in the future, they can be token-gates to other club channels. We believe that such transactions should be regulated as commodity purchases or financial transactions.
Expressing his skepticism about the real-world use of fan tokens, Newman stressed that the offering should not “replace traditional fan management or fan trust” but improve dialogue between clubs and fans.
“We understand that the gift we offer is not appealing to everyone, and we respect that,” he said.
In addition, Newman emphasized adherence to sociological norms.
“We recently saw the inauguration of the first phase of crypto regulation in the UK,” he told Decrypt. “We have actively participated in this process by providing evidence, sharing our research, explaining the platform's workings, and outlining the complexities of supporting tokens.”
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ToggleThe UK committee goes beyond fan tokens
The report pointed out the risk associated with NFTs linked to sports clubs, emphasizing the similarity with gambling. The committee proposed that the retail trade of previously unsupported crypto-assets should be equated to gambling.
However, Andrew Griffiths MP, economic secretary of the Treasury, expressed concern about the problems that could be brought into line with international standards, especially from bodies such as the European Union.
Globally, many countries are developing regulations for Web3 sports platforms.
The French SREN Bill, which aims to improve digital security, shows the country's active stance on new technologies such as NFTs and cryptocurrencies.
This bill, which is often called “Sorre's Law” by the media, is now being reviewed by the National Assembly. The French company Sorare In 2019, it launched a fantasy sports game where players can play with free cards or NFTs that can be resold on the secondary market.
Last year, the company reached an agreement with the Autorité Nationale de Jacques (National Gaming Authority) to avoid being classified as a casino.
Although 90% of the user base was accessing the platform's free content, it had to expand its range of free products.
It specifically includes provisions for games based on NFT and crypto technologies.
These guidelines distinguish Web3 games from traditional gambling, the difference is based on three key factors: financial commitment, element of luck and possible financial benefits.
