Arts & Culture

Artists, consumers and club reputations at risk due to crypto assets, MPs warn

Featured Image: Emerson Vieira on Unsplash

UK Members of Parliament (MPs) have warned that cryptocurrency fan tokens can risk damaging sports clubs’ reputations, while the use of tokens in the world of art has led to the risk of widespread copyright infringement.

Non-fungible tokens (NFTs) and digital collectibles have become popular among sporting organisations in boosting the fan experience. However, the UK’s Culture, Media and Sport (CMS) Committee has released a report titled ‘NFTs and the Blockchain: the risks to sport and culture’, which has said that crypto assets could put supporters at risk of financial harm. 

The report highlighted evidence of misleading and fraudulent advertising of NFTs, and has called on the UK Government to ensure that all those involved at each stage of marketing crypto assets take responsibility to protect consumers. 

CMS noted that with little financial risk to athletes, clubs and leagues, tokens can provide real risk for fans that invest them. The Committee also detailed issues surrounding the membership perks and benefits that are often included with the fan tokens, which have not always been delivered.

The report added that fan tokens in football did not count as an acceptable measure of engagement in the forthcoming regulation of the game. The Committee highlighted the price volatility of such tokens and reservations from fan groups.

Dame Caroline Dinenage MP, Chair of the CMS Committee, said: “Traditional regulatory regimes have failed to protect both creatives and consumers caught up in the volatile new crypto world. 

“Artists are at risk of seeing the fruits of their hard work pinched and promoted without permission while fraudulent and misleading adverts add an extra layer of jeopardy for investors involved in what is already an inherently risky business. The Government must make sure that everyone in the crypto chain is working to properly protect consumers and the rights of creators.”

She added: “In the world of sport, clubs are promoting volatile cryptoasset schemes to extract additional money from loyal supporters, often with promises of privileges and perks that fail to materialise. Fan token schemes must not be used as a substitute for meaningful engagement with supporters.” 

CMS has also urged the Government to work with NFT marketplaces to address the scale of copyright infringement in the art industry. CMS argued that the process of having a creator’s work taken down due to copyright infringement was more time-consuming and difficult compared to the ease of minting NFTs. 

CMS was not completely against the use Blockchain and NFTs in the art world as they could create new markets for artists, but the Committee found that there was real risk around this including issues with intellectual property.