The U.K. Parliament’s Culture, Media, and Sport Committee cautioned that non-fungible tokens (NFTs) pose an elevated risk of copyright violations, while crypto fan tokens could potentially expose supporters to financial harm.
Speaking on the report, the Committee’s chair, Dame Caroline Dinenage, said the “traditional regulatory regimes have failed to protect creatives and consumers caught up in the volatile new crypto world.”
NFTs pose copyright infringement issues.
According to the Oct. 11 report released by the Committee, it was observed that the expected advantages of NFTs have not materialized significantly. Instead, the report underscores the presence of tangible risks and adverse effects for both creators and consumers.
The Committee raised concerns regarding the impact of NFTs on existing regulatory frameworks, suggesting that the glory days of the digital asset sales witnessed last year might not return.
These concerns align with a recent DappRadar report, indicating that NFT trading volume and sales have hit their lowest levels since the previous year’s first quarter.
In response, the Committee has urged the government to hold all stakeholders in the crypto asset market accountable for consumer protection. Furthermore, they emphasize the need to address copyright infringement issues within this burgeoning industry.
Dineage said:
“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. The Government must make sure that everyone in the crypto chain is working to properly protect consumers and the rights of creators.”
Issues with fan tokens
The Committee stated that “the use of fan tokens in football does not count as an acceptable measure of engagement in the forthcoming regulation of the game.”
The report further noted that the tokens could put supporters of these clubs at risk of financial harm and even damage the reputations of clubs issuing them. The Committee said:
“[The fan token] are not delivering on promises of fan engagement and are being marketed as equivalent to other legitimate club memberships.”
Fan tokens have become increasingly popular in the U.K., with several premiership clubs, including Manchester City (CITY), Everton (EFC), Arsenal (AFC), and others issuing a token for their supporters. Data from CryptoSlate shows that the sector’s total market capitalization stands at $223.7 million as of press time.
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