Written by: Susannah Streeter | Hargreaves Lansdown
The Advertising Standards Authority has taken on the role of referee in the high stakes game of crypto trading, with the whistle blown on Arsenal football club, the latest in a string of rulings against companies which are flogging coins or tokens without high risk warnings.
ASA officials are running the line, assessing every complaint, but with scant other regulation governing crypto assets, and so many cries of foul springing up across social media in particular, it’s becoming an increasingly difficult play to monitor.
It has banned Arsenal Football Club’s posts on Facebook and its website which promoted ‘fan’ tokens as they took advantage of consumers’ inexperience in cryptoassets and misled consumers by not making it clear that these NFTs had to be bought using another cryptocurrency.
NFTs which have been described as modern day trading cards are seen as valuable streams of fresh revenue for football clubs. Some individual non fungible tokens have sold for millions of dollars, as a bubble of speculation has blown up in the crypto Wild West, and the art, music and gaming industries have scrambled to start playing the game.
The ambition for high returns is huge. Take the group of US crypto fans who have expressed interest in buying Bradford City Football club believing that by selling these digital tokens to fans, revenues from sales will enable them to outspend opponents in pursuit of promotion. But fans should think very carefully before parting with their money, as cryptoassets are very complex, are difficult to value and are highly volatile.
Ethereum, the blockchain network upon which many NFTs are spawned and where they are traded in marketplaces, has seen its value fall by 13% since the start of December.The rollercoaster ride is set to continue given that crypto assets are also highly sensitive to the fortunes of the stock market and were propelled higher in an era of ultra cheap money. As speculation swirls about how rapidly central banks will keep tightening mass bond buying programmes and raising interest rates, given soaring inflation, they are likely to stay volatile.
There is a risk that the initial frenzy of interest in many of today’s NFTs will wane, and the assets could end up being almost worthless, in the same way as once sought after CDs, vinyl or even popular football players have ended up in the bargain bin.