The growing popularity of NFTs in this context has raised concerns about the financial risks for fans and prompted regulatory scrutiny. Here's an update on the current landscape:
The Treasury Committee, in its report on Regulating Crypto, likened speculation in unbacked crypto assets to gambling, emphasising the significant risks posed to consumers. The Committee recommended regulating retail trading and investment in unbacked crypto assets as gambling rather than as a financial service. This aligns with the principle of 'same risk, same regulatory outcome.'
Despite these recommendations, the UK Government, represented by Andrew Griffith MP, rejected the proposal, citing concerns about misalignment with international standards and potential conflicts between financial regulators and the Gambling Commission.
Key points to Note:
The report on Football Governance highlights varying levels of fan engagement across English football. The introduction of an Independent Regulator for English Football is seen as an opportunity to enhance fan engagement, with the recommendation that it sets and enforces higher standards than leagues to ensure clubs meet fan needs.
Caution is advised against presenting fan tokens as a future form of fan engagement due to their price volatility and reservations among fan groups. The recommendation is made to explicitly exclude the use of fan tokens in measuring fan engagement in sports, including forthcoming football regulations.
Advertising regarding crypto assets, often targeting retail investors, is criticised for being unclear, overstating benefits, and rarely warning of volatility risks. High-profile cases of action taken against NFT advertising in sports, such as rulings against Arsenal and FC Barcelona, highlight misleading aspects and inadequate risk disclosure.
The regulation of NFT-related advertising is divided between the Financial Conduct Authority (FCA) and ASA, with enforcement based on the nature of the product, advertising medium, and content. ASA has taken proactive measures against misleading NFT advertisements, emphasising the need for advertisers to specify risks and adhere to advertising guidelines.
Recommendations include strengthening ASA's regulatory capabilities, especially concerning challenges from football clubs, to improve effectiveness and enforcement.
The Government intends to introduce statutory regulation for online advertising, focusing on actors outside the self-regulatory regime, including online ad-funded platforms, intermediaries, and publishers. The proposed regulatory framework will introduce duties of care to prevent illegal and age-inappropriate content in paid-for advertising. The Ministerial-led task force will expand the evidence base, identify gaps, and drive non-legislative interventions to protect consumers from illegal and age-inappropriate ads.
It is recommended to introduce a code of conduct for online marketplaces, including NFT platforms, to address issues related to infringing and fraudulent material.
The Government should publish its analysis of the implementation of Article 17 of the EU Directive on Copyright in the Digital Single Market and equivalent approaches by non-EU countries by the end of the year.
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