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The United Kingdom’s Culture, Media, and Sports Committee alleges that the promotion of crypto assets and fan tokens in professional sports is detrimental to supporters.
“The promotion of crypto assets in professional sport is putting supporters at risk of financial harm and potentially damaging the reputations of clubs,” the statement declares.
The Volatility of Fan Tokens’ Prices Poses Risks for Sport Supporters
In a recent statement, concerns over the increasing prevalence of fraudulent non-fungible token (NFT) projects have been voiced by the committee. They call on the UK government to tighten regulations on promoting these projects at all levels.
Furthermore, the committee encourages the government to prohibit fan tokens in football as a club’s metric of engagement with its supporters. The group of MPs attributed this decision to price volatility. They also cited the supporters’ lack of confidence in investing in these projects.
However, the UK Financial Conduct Authority (FCA) has recently enforced rigorous regulations on marketing crypto to the public. Among these rules is a prohibition on incentives based on referring friends.
Dame Caroline Dinenage MP, the chair of the committee, criticized sports clubs for using crypto with fans, claiming that the majority ultimately fail:
“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 fails to materialise.”
In the sports industry, fan token incentives can be highly profitable.
Recently, Binance unveiled a program that enables holders to exchange their points for exclusive meet-and-greet opportunities with their favorite athletes.
Major Sports Embrace the Emergence of Fan Tokens
The Chiliz (CHZ) token is one of the most frequently used tokens by sports clubs.
This is the native crypto of the blockchain sports and entertainment platform Socios. CHZ allows fans to participate in the decision-making processes of their chosen sports teams.
At the time of publication, CHZ’s price is $0.056.
Meanwhile, BeInCrypto reported that last year, FC Porto fans could choose a meet-and-greet location with their favorite players.
Conversely, Manchester City and crypto exchange OKX introduced a metaverse initiative. The initiative allows fans to further engage with the club and win exclusive prizes.
Within the virtual world, fans gain access to exclusive training materials and the chance to acquire NFTs.