The committee concluded that any measure of fan engagement in sports should not include the use of fan tokens.
NFTs in sports have taken shape mostly in the form of fan tokens. But the Culture Media and Sport Committee in the UK has accused clubs of promoting volatile tokens to exploit fans.
UK MPs caution against NFTs
According to the Culture, Media, and Sport Committee (CMS) report released on Wednesday, the committee warned against the use of NFTs in sports. The committed hinged on the volatility of crypto prices and the risk of financial harm to supporters who are forced to purchase tokens to gain club access.
CMS committee chair Dame Caroline Dinenage MP said: “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.”
The report emphasised that the unique relationship between fans and their clubs should not be built on speculative assets like NFTs. They argue that this may endanger the reputation of clubs and also cause financial losses to the fans.
The report said: “The unique relationship between clubs and fans means that fan speculation on sport-based cryptoassets carries a real risk of financial harm to fans and reputational harm to clubs.”
The committee concluded that any measure of fan engagement in sports should not include the use of fan tokens.
Read more: The UK is getting ready to “scale up” on crypto, says MP
Stolen work is rife
The committee also pinpointed the copyright issues that surround the sale of these tokens. The MPs stressed on the inability of artists to make money and royalties from their works as a result of its being stolen on the Blockchain.
“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,” Dinenage said.
“The government must make sure that everyone in the crypto chain is working to properly protect consumers and the rights of creators,” she added.
To tackle this issue, the committee recommended that regulating online marketplaces, including NFT platforms, may help safeguard everyone in the ecosystem including buyers, sellers, and most importantly, the creators.
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