A parliamentary committee in the United Kingdom has called for stricter regulations on sports fan tokens and has proposed that the government establish a code of conduct for NFT platforms. In a bipartisan move, a parliamentary committee in the UK has strongly recommended that the government takes measures to safeguard the rights of creators in the face of copyright violations linked to nonfungible tokens (NFTs). Additionally, the committee aims to tackle potential issues arising from sports organizations releasing digital assets. In a press release dated October 11, the Culture, Media and Sport Committee emphasized that the most critical concern is the threat to artists’ intellectual property rights due to the rapid and easy minting of NFTs, in stark contrast to the sluggish process artists encounter when attempting to protect their rights. Dame Caroline Dinenage, the committee’s chair, expressed concern, saying, “Artists face the risk of their hard-earned creations being used and promoted without their consent. Furthermore, fraudulent and misleading advertisements add another layer of risk for investors in an already inherently uncertain industry.” The committee’s accompanying report includes a recommendation for the government to collaborate with NFT marketplaces. This collaboration would entail introducing a code of conduct aimed at safeguarding the interests of creators, consumers, and sellers, thereby reducing the prevalence of infringing and potentially deceptive content on such platforms. Moreover, the committee has raised a red flag regarding the potential negative consequences of sports leagues or teams launching their own cryptocurrencies to distribute among fans. They have suggested that any metric used to assess fan engagement should exclude these tokens. This concern stems from the recent trend of various football organizations in the UK, such as Manchester City and Tottenham Hotspur, issuing “fan tokens” to their supporters and club members. These tokens are meant to grant exclusive privileges and benefits, but the committee asserts that these promises often go unfulfilled. The committee’s report warns, “We are also concerned that clubs may continue to present fan tokens as a suitable form of fan engagement in the future, despite their price volatility and the reservations held by fan groups.” The committee has pointed out that the volatility of these tokens could result in financial harm to fans who may not fully grasp the inherently precarious nature of these assets. They conclude, “Within the realm of sports, clubs are endorsing volatile crypto asset schemes to extract additional funds from loyal supporters, often with pledges of exclusive advantages that fail to materialize.” In light of these concerns, the committee’s ultimate recommendation is that “any assessment of fan engagement within sports, including the upcoming regulation of football, should explicitly exclude the utilization of fan tokens.”
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