On October 11th, members of the UK Parliament and the Culture, Media, and Sport Committee issued a warning to the public regarding NFTs (Non-Fungible Tokens) and fan tokens. In their report, they highlighted the potential copyright violations associated with NFTs and the financial risks and identity harm posed by fan tokens for investors and the clubs issuing them.
Additionally, lawmakers and the committee called on the UK government to take measures to protect creators from copyright violations related to NFTs and address potential issues arising from sports organizations issuing digital assets like fan tokens.
Dame Caroline Dinenage, the Chair of the Committee, expressed concerns about artists’ intellectual property rights being infringed upon and the potential for misleading advertising that could harm investors participating in these high-risk business ventures. She also mentioned the failure of traditional regulatory frameworks to safeguard creators and consumers in the volatile world of cryptocurrencies.
Concerning NFTs, the committee recommended government cooperation with NFT markets to establish codes of conduct aimed at protecting creators, users, and sellers from copyright violations and potential fraudulent activities on these platforms. They emphasized the impact of NFTs on existing legal frameworks and suggested that the heyday of NFT trading might be challenging to return to.
These concerns align with a recent report by DappRadar, which indicated that the trading volume and sales of NFTs had reached their lowest levels since the first quarter of the previous year.
Regarding fan tokens, the committee called for a ban on these digital assets due to their volatility and associated risks. In the UK, football clubs like Manchester City and Tottenham Hotspur have issued fan tokens for their fans and club members. However, the committee argued that purchasing these tokens often does not provide exclusive rights and benefits as advertised.
The committee also expressed concerns about clubs using fan tokens as a suitable form of fan interaction in the future, despite the price volatility and tension among fan groups. Therefore, any measures related to fan engagement in sports, including upcoming regulations in football, should explicitly exclude the use of fan tokens.
As of the time of writing, the total market capitalization of fan tokens stands at $223.7 million.