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Manchester City's training kit is sponsored by Seychelles-based crypto-exchange OKX © Alamy

MPs debate promotion of cryptoassets in football

MPs have called on the Government to regulate cryptoassets in football to protect consumers from the risks inherent in the products now being promoted across the game.

The Westminster Hall debate, brought about by Conservative MP for Newcastle-Under-Lyme Aaron Bell, examined the nature of crypto-partnerships and sponsorships now prevalent in the Premier League and EFL.

“I hope that this debate today has raised awareness of the problems with cryptoasset promotions within sport, and put pressure on the Government and sports governing bodies to take action,” Bell said.

“Many cryptoassets have little or no intrinsic value and serve predominantly as a vehicle for financial speculation.”

It’s been hard not to notice the explosion of cryptocurrency deals across football, as club execs and commercial departments chase football’s latest gold rush.

And those deals with crypto firms have taken many forms, including clubs signing deals with peddlers of fan tokens (offering paid-for engagement on trivial matters), traditional sponsorship deals and players endorsing questionable NFT collections.

There have been numerous high-profile cases of clubs entering into partnerships with crypto-firms without vetting them beforehand. In August, Barnsley terminated its shirt sponsorship with Hex.com – a crypto firm that somehow promised 40% returns for investors – after abusive homophobic tweets from its founders were discovered.

Despite these cases and the crash in the crypto market earlier this year which resulted in a cratering of NFT trading numbers, clubs continue to pursue these deals.

Consequently, the FSA has been observing the trends around cryptoassets in football and this summer supporter representatives voted on a new policy covering crypto in football at our 2022 AGM.

“The products also lack protection for the consumer buying them,” Bell told the Hall. “If consumers don’t know what such schemes are about, then they probably shouldn’t be investing in it.

“Additionally, the clubs, leagues and players promoting such schemes have frequently not undertaken the necessary due diligence, putting their own fans at financial risk.

“I will happily work with Government and other interested parties to achieve protection for fans and constituents alike.”

Labour’s representative at the debate Jeff Smith said that regulation was needed to prevent the spread of misleading marketing to football supporters.

Labour MP, and member of the APPG for Football Supporters, described the trend as a “worrying development for football fans.”

“We need some action and we need regulation,” Smith said. “Labour is not advocating a ban on the ownership of cryptocurrencies. We recognise the opportunities they can create for our economy when done right.

“Proper regulation of cryptoasset promotions marketed to sports fans is clearly needed.

“The clear message from across this Chamber today has been that this is a really worrying development for football fans. It is not something we need necessarily, unless the clubs and businesses are out to make money and at the expense of football fans. Regulation is clearly needed.”

In response, the Government said it will be looking to bring certain cryptoassets into the scope of the Financial Services and Markets Act to ensure that crypto promotions are “fair, clear and not misleading.”

However, sports minister Stuart Andrew also said that the Government wanted to encourage innovation and investment in crypto products in the UK.

“Any such innovations should be implemented responsibly, in line with any relevant regulation, and with transparency in how they are advertised and promoted,” Andrew told MPs.

“We want to ensure that firms can invest, innovate and scale up in this country, and we have announced a number of reforms that will see the regulation of cryptoassets and aspects of tax treatment evolve.

“Our clear message to cryptoasset firms is that the UK is open for business, and these announcements are in line with our objective to create a regulatory environment in which firms can innovate while, crucially, maintaining financial stability and regulatory standards, so that people can use new technologies both reliably and safely.”

He said the Government’s measures aim to “improve consumer understanding of the risks and benefits associated” with cryptoassets and that their promotions are held to the same standard as other similarly risky financial services.

“Misleading promotion, consumer protection, due diligence and fan engagement are interconnected factors that must be considered and addressed in the context of cryptoasset promotion in sport,” Andrew said.

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