British lawmakers demand action on NFT copyright violations and crypto fan tokens

By: Bharggavi Ssayee

British lawmakers demand action on NFT copyright violations and crypto fan tokens

October 11, 2023 8:37 AM

A parliamentary committee in the United Kingdom recently requested the government to crack down on so-called "sports fan tokens" and to issue a code of conduct for NFT platform.

A bipartisan parliamentary committee has advised the United Kingdom government to protect creators from copyright infringement caused by nonfungible tokens (NFTs) and to address potential issues caused by sports leagues issuing digital assets.

Culture, Media, and Sport Committee members issued a press release on October 11 highlighting the "most pressing issue" as the potential threat to artists' intellectual property rights posed by the rapid creation of NFTs in contrast to the lengthy procedure artists must go through to assert their rights.

Committee head Dame Caroline Dinenage warned that "artists are at risk of seeing the fruits of their hard work pilfered and promoted without permission" and that "fraudulent and misleading advertisements add an extra layer of risk for investors in what is already an inherently risky business."

In a companion report, the committee asked the government to work with NFT marketplaces to address these infringements by developing a code of conduct that protects artists, customers, and sellers against infringing and potentially fraudulent material sold on such platforms.

The committee has also called for a ban on sports leagues or teams creating their own cryptocurrencies to sell to fans.

Other British football clubs, including Manchester City and Tottenham Hotspur, have recently handed "fan tokens" to their supporters and club members. According to the committee, it was typical practice for such tokens to fail to confer the stated exclusive rights and benefits on their purchasers.

"We also have concerns that clubs might promote fan tokens as a suitable method of fan involvement in the near future, disregarding their price fluctuations and reservations among fan groups," the research says.

The committee contended that fans who did not fully comprehend the tokens' "inherently risky" nature could incur financial losses as a result of their extreme volatility.

"Clubs endorse volatile cryptocurrency asset schemes in all areas of sport to extract more money from devoted fans, frequently with claims of privilege and rewards that don't materialize."

The committee concluded that "any measurement of fan involvement in sports, particularly in the imminent football regulations, should specifically prohibit the use of fan tokens."