Crypto Fan Tokens in Firing Line for Fleecing Sports Fans


  • UK lawmakers condemn crypto fan tokens as exploitative.
  • The stated fan token perks and benefits usually amount to nothing.
  • Fan token prices are nursing severe drawdowns from all-time highs.

Crypto fan tokens have emerged as a new way for sports fans to engage with and support their favorite teams. Socios and its Chilliz network have led the charge, partnering with major football clubs like Barcelona, Juventus, and Paris Saint-Germain to launch branded fan tokens.

However, the value of fan tokens has plummeted as the cryptocurrency market continues to experience a downturn. For instance, the Barcelona FC fan token, which peaked at over $72 in April 2021, has lost 97% of its value. This trend is consistent across other fan tokens, fueling concerns about financial exploitation by sports clubs.

Crypto Fan Tokens Under Fire

Participating in the cries of financial exploitation, UK lawmakers are sounding the alarm as the Culture, Media and Sport Committee (CMSC) urged the government to do more about clubs exploiting their fanbase through risky crypto investments.

A CMSC report recommended that crypto fan tokens should not be considered fan engagement tools, as defined under the purview of forthcoming football regulation. The report highlighted the lopsided relationship in sports-based crypto assets in that fans carry a serious risk of financial harm, yet clubs do not bear the same degree of burden.   

Fan tokens are often marketed as a way for fans to influence club-related decisions and interact with their favorite sports teams. However, the CMSC chair, Dame Caroline Dinenage, raised concerns that these benefits usually amount to nothing, adding that fan tokens are no substitute for meaningful engagement.

“Clubs are promoting volatile crypto-asset schemes to extract additional money from loyal supporters, often with promises of privileges and perks that fails to materialise,” warned Dame Dinenage.

While the promised benefits of holding fan tokens rarely materialize, their prices continue dwindling, sparking further concerns that sports clubs are exploiting fan loyalty with little offered in return.

Dwindling Prices and Trading Volume

The values of fan tokens have plummeted dramatically from their peaks just a couple of years ago. Although Barcelona FC is the most popular fan token, that has done little to halt a 97% drop in value from its all-time high (ATH). Likewise, Paris Saint-Germain, the next most popular fan token, is down 95% from its April 2021 ATH, while Manchester City has lost 93% since peaking in August 2021.

Football finance expert Kieran Maguire explained that fan tokens rode a wave of hype when launched, leading to inflated prices off the back of the speculative mania. However, investors jumped ship once they discovered that the benefits of holding fan tokens were insignificant. The result has been a decimation of fan token prices and diminishing trading volumes, clarified Maguire.

On the Flipside

  • Crypto firms view sports as a prime way to reach younger audiences and are already deeply embedded via buoyant sponsorship interest.
  • Digital assets are volatile, and many tokens are significantly below ATHs, not just fan tokens.
  • Fan tokens spur a bigger debate on monetizing fan engagement versus active community building.

Why This Matters

The increasing proliferation of cryptocurrency in the sports industry has blurred the line between fandom and finance. This puts the onus on sports clubs and organizations to take more responsibility for endorsing risky crypto investments to their supporters, who may be vulnerable to exploitation by their loyalty to their team.

Learn more about Barcelona FC’s fan token sell-out launch in 2020 here:
First 600k of FC Barcelona Fan Tokens Sold out in Few Hours

Bitcoin developer proposes novel method to enhance the network’s technical capabilities. Read more here:
Forget Ethereum, Bitcoin Upgrade Unlocks Smart Contracts



Source link: https://dailycoin.com/crypto-fan-tokens-in-firing-line-for-fleecing-sports-fans/

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