When does a crypto token cease to be an investment? if the token is for a fan. The CVM (Comisso de Valores Mobiliários), Brazil’s regulatory body, at least holds that opinion. The SEC-like organisation has made a distinction between cryptocurrencies and fan tokens, describing the latter’s purpose beyond simple speculation. The remarks, issued by Antonio Carlos Berwanger, the CVM’s Market Development Superintendent, provide further clarity to a region known for its passion for football.
Regulators Understand Fan Tokens
The definition of a utility token is hotly contested, especially in jurisdictions with a significant regulatory burden like the US, where Gary Gensler, the chair of the SEC’s currency division, contends that the majority of digital assets are securities. However, his hardline position is unpopular both domestically and overseas, where other nations have their own crypto legislation in place. This responsibility lies with the CVM in Brazil, whose recent explanation of fan tokens seems to have struck a chord with Portuguese-speaking football enthusiasts.
Brazil’s 214 million people claim to love football, creating a market that is ideal for the growth of SportsFi, a sector that blends fan power with web3 components and is propelled by tokens that can be used to unlock prizes and experiences. Football is not the only sport to have used fan tokens, but Tottenham Hotspur is the most recent team to do so on the sports retailer Chiliz. Chiliz’s blockchain infrastructure has processed more than $400M in revenue for sports teams and organizations over the previous five years.
Sports in the digital age: A redefinition
Sports have adopted digital media as the world has. Even while there are still many games played on grass and astroturf fields around the world, esports players’ online competitions outweigh them by a wide margin. Professional esports players from many top football teams now represent their clubs in popular video games like “FIFA” and engage in lucrative competitions. Football clubs have changed with the times and embraced a digital-first approach since the way in which football is consumed has changed from draughty stadiums to streaming platforms.
Where do fan tokens fit into this picture, then? They just represent a logical progression of sports digitalization, in a way. Whether it’s savings in a neobank or bitcoin in a blockchain wallet, the majority of our money is now digital. An extension of this is unavoidably fan tokens. Whether they serve primarily as a speculative vehicle or as a medium of exchange that may be redeemed for different benefits and rewards is the question, at least from a regulatory perspective.
What role do fan tokens play in this scenario then? They only reflect a logical step in the digitalization of sports. Most of our money is now digital, whether it’s savings in a neobank or bitcoin in a blockchain wallet. Fan tokens are unavoidably a continuation of this. The concern, at least from a regulatory standpoint, is whether they primarily function as a speculative vehicle or as a medium of exchange that can be exchanged for various advantages and benefits.
In other words, fan tokens are more about loyalty than they are about profit. Just as devoted supporters will stick by their team through good times and bad, so too will they keep fan tokens in their wallet as long as they continue to be useful. This is supported by Deloitte’s Sports Fan Insights report, which finds that nearly 75% of fans are interested in them if they offer the chance to win prizes and that 40% of supporters are familiar with fan tokens. Even if it might take some time for “SportsFi” to make it into the vocabulary, the era of fan tokens has already begun.
