MPs have warned that football clubs promoting crypto fan tokens could be at risk of endangering their reputations as buyers risk losing all that they invest.
During a parliamentary committee for the UK’s Culture, Media, and Sport department, a group of MPs noted how the rise of non-fungible tokens (NFTs) and similar assets in sports are becoming a growing concern and have advised against clubs exploiting fans.
Companies like Socios, a blockchain-based ‘fan engagement’ platform, have worked with numerous sporting clubs to promote its parent organisation and cryptocurrency Chilliz.
Users are urged to purchase fan tokens, generated through the Chiliz blockchain, to help invest in the teams they support, with the most ‘loyal’ of fans receiving exclusive gifts like VIP tickets, signed merchandise, or one-off experiences.
Currently around a third of Premier League clubs are signed up to Socios including Arsenal, Manchester City, and Everton.
Last month, Tottenham Hotspur penned a deal with the group and urged season ticket holders and members to redeem their tokens on the Socios app.
Spurs’ fan trust condemned the app, warning that signing up for the platform was a “high-risk investment”.
“We do not believe that fan engagement should be monetised nor should it be conducted via a third-party provider. Nor do we believe that fans should be lured by the promise of “benefits” to purchase fan tokens which are a risky cryptocurrency that could lose most or all of its value,” the fan’s trust added in a statement online.
Under new Financial Conduct Authority (FCA) rules, a warning must be provided for crypto investments, telling those they should “be prepared to lose all the money you invest.”
NFTs, unique digital assets bought and sold without physical form, include fan tokens, acting as certificates of ownership. They grew in popularity over recent years although in 2023 the market has seen countless valuations plummet.