A bipartisan parliamentary committee has urged the British government to protect creators from copyright infringement associated with nonfungible tokens (NFTs) and address potential harms from sporting groups issuing digital assets.
In an Oct. 11 press release, Culture, Media and Sport Committee members warned the “most pressing issue” was the risk to artists’ intellectual property rights arising from the ease and speed at which NFTs can be minted, compared to the slow process for artists looking to enforce their rights.
“Artists are at risk of seeing the fruits of their hard work pinched and promoted without permission while fraudulent and misleading adverts add an extra layer of jeopardy for investors involved in what is already an inherently risky business,” said committee chair Dame Caroline Dinenage.
In an accompanying report, the committee recommended the government work with NFT marketplaces to address these infringements by introducing a code of conduct that protects creators, consumers and sellers from infringing and potentially fraudulent material sold on such platforms.
The committee also warned of the potential harms of sporting leagues or teams creating cryptocurrencies to offer to fans and called for such digital assets to be banned.
It follows numerous United Kingdom-based football organizations, including Manchester City and Tottenham Hotspur, releasing “fan tokens” to followers and club members. Purchasing such tokens is supposed to offer exclusive rights and benefits, but the committee claimed this often failed to be the case.
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“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 said.
The committee claimed the volatility of these tokens could cause financial harm to fans, who were unaware of the “inherently risky” nature of the asset.
“In the world of sport, clubs are promoting volatile crypto asset schemes to extract additional money from loyal supporters, often with promises of privileges and perks that fails to materialize.”
The committee concluded that “any measurement of fan engagement in sports, including in the forthcoming regulation of football, should explicitly exclude the use of fan tokens.”