MPs Warn About Risks Posed by NFTs and Crypto Assets in Art and Sports
The Culture, Media and Sport Committee of Members of Parliament (MPs) has issued a report highlighting the risks associated with the use of non-fungible tokens (NFTs) and crypto assets in the art and sports industries.
The report, titled “NFTs and the Blockchain: the risks to sport and culture,” points out the potential for copyright infringement and misleading advertising in the NFT space.
Copyright Infringement and NFTs
The report emphasizes the pressing issue of copyright infringement in the NFT space. It notes that the ease of creating infringing NFTs makes it challenging for artists to protect their intellectual property rights. The report recommends that the government work with NFT marketplaces to address copyright infringement and enable copyright holders to enforce their rights effectively.
The report also highlights concerns about misleading and fraudulent advertising of NFTs and crypto assets. Due to the technical and largely unregulated nature of NFTs, advertising them poses significant risks to consumers, including the potential for scams and fraud. The report calls for the government to take steps to mitigate these risks, compelling the entire advertising supply chain to protect consumers from the marketing of NFTs.
Risks in Professional Sport
The report acknowledges the growing popularity of NFTs in professional sports, offering a new revenue stream for athletes, clubs, and leagues. However, it points out that NFTs are inherently risky for fans who invest in them. The report expresses concerns about the use of fan tokens in professional sport and recommends that any measurement of fan engagement in sports should exclude the use of fan tokens.
The Culture, Media and Sport Committee makes several key recommendations in the report:
- Address copyright infringement in the NFT space by working with NFT marketplaces.
- Introduce a code of conduct for online marketplaces, including NFT platforms, to protect creators, consumers, and sellers.
- Exclude the use of fan tokens from any measurement of fan engagement in sports.
- Respond to misleading and fraudulent advertising for NFTs with a regime that compels the advertising supply chain to mitigate risks to consumers.
In conclusion, the report from MPs highlights the need for regulatory oversight and consumer protection in the NFT and crypto asset space, particularly in the context of art and professional sports. The recommendations aim to address copyright infringement, misleading advertising, and the risks associated with fan tokens in sports.