cryptonews.com
The UK’s Culture, Media and Sport Committee, a cross-party parliament group, is recommending the Government take action on the “widespread copyright infringement” in non-fungible tokens (NFTs).
The committee MPs have warned that the promotion of cryptocurrencies in professional sports is putting supporters at risk of financial loss and potentially damaging clubs’ reputations.
“In professional sports NFTs are being used to extract additional revenue from international fans and, in some instances, as a proxy for fan engagement. NFT advertising may be misleading or even fraudulent,” the committee report stated.
The report highlighted evidence of fraudulent advertising of NFTs and has urged the Government to make sure that advertisers of crypto assets take responsibility to protect customers.
The cross-party Commons also called Government to work with NFT marketplaces to introduce a code of conduct to protect creators and consumers better.
Addressing Copyright Infringement
The intersection of NFTs and copyright can give rise to potential legal issues like infringement, when unauthorized parties create, buy or sell NFTs without permission from the creators and owners.
Dame Caroline Dinenage MP, Chair of the CMS Committee noted that NFT artists and creators are at risk of seeing their works promoted without permission and fraudulent promotions have added an extra layer of jeopardy for investors.
“The Government must make sure that everyone in the crypto chain is working to properly protect consumers and the rights of creators.”
Dinenage also said that sport clubs “are promoting volatile cryptoasset schemes to extract additional money from loyal supporters.” They do so with fake promises of privileges.
In November 2022, the committee started an inquiry into NFTs and what the nascent tech could provide the UK economy.
“We are also concerned that clubs may present fan tokens as an appropriate form of fan engagement in the future, despite their price volatility and reservations among fan groups,” the report added.
However, according to a spokesperson of Socios, one of the biggest providers of fan tokens, unlike NFTs, fan tokens are regulated by the Financial Conduct Authority (FCA) and offer new and complementary benefits to the club.
“Fan token holders received more than 24,000 matchday tickets and over 1,000 items of merchandise last season, and continue to engage with their club in a unique new way,” the spokesperson notes.