Select committee: Digital, Culture, Media and Sport Committee

Fourteenth Report - NFTs and the Blockchain: the risks to sport and culture

HC 598 Published 11 October 2023

Digital, Culture, Media and Sport Committee Non-fungible tokens (NFTs) and the blockchain Report on parliament.uk ↗

At a glance4 recommendations · Government response published 12 January 2024 (deadline 11 January 2024)

The government's response

Summary written by Accountability Index from the government's response. It is not the government's own words.

The Government responds to the Committee's NFT report by setting out existing protections and ongoing work, declining a new code of conduct and the requested Article 17 analysis, while committing to engage with NFT marketplaces.

On a code of conduct for online marketplaces, the Government "does not intend to introduce" one, saying stakeholder engagement showed "a code was not needed at that time" and that it is "not aware of any evidence" to change this for NFT marketplaces.
On analysis of Article 17 of the Digital Single Market Directive, the Government is "unable to conduct this analysis at present" as "more time is required". It will engage with NFT marketplaces, which "will help to inform any future, potential policy approach".
On fan tokens, the Government says they will not form part of the Independent Football Regulator's assessment of fan engagement, which will review "the structures in place for consulting a representative group of supporters".
On misleading NFT advertising, the Government "will introduce a new regulatory framework" to combat scam and fraudulent advertising, including advertising relating to NFTs, requiring in-scope organisations in the advertising supply chain to have "proportionate systems and processes" in place.

Read the government's response ↗ Report an error

What the committee recommended 4

1
Introduce a code of conduct for online marketplaces protecting creators from infringing material. Recommendation · paragraph 18
2
Publish analysis of Article 17 implementation and equivalent international copyright approaches by year-end. Recommendation · paragraph 19
3
Exclude fan tokens from all measurements of fan engagement in professional sports regulation. Recommendation · paragraph 29
4
Mandate the Ministerial taskforce to explicitly review misleading and fraudulent NFT and cryptoasset advertising. Recommendation · paragraph 38

Sources

Fourteenth Report - NFTs and the Blockchain: the risks to sport and culture ↗The committee's report, HC 598, parliament.uk
Fourth Special Report - NFTs and the Blockchain: the risks to sport and culture: Government Response to the Committee’s Fourteenth Report of Session 2022–23 ↗The government's response, 12 January 2024, parliament.uk

Recommendations and conclusions 4

1
Introduce a code of conduct for online marketplaces protecting creators from infringing material. Recommendation · paragraph 18 · addressed to Department for Culture, Media and Sport Recommendation (the committee's words)
Intellectual property laws and copyright protection are central to enabling artists to create, innovate and make a living from their work. Emerging technologies that undermine these protections have a profound impact on individual artists and the UK’s world-leading creative industries more generally. We recommend that the Government engages with NFT marketplaces to address the scale of infringement and enable copyright holders to enforce their rights. The Government should also address the impact of safe harbour provisions by introducing a code of conduct for online marketplaces operating in the UK, including NFT marketplaces, that protects creators, consumers and sellers from infringing and fraudulent material sold on these platforms.
2
Publish analysis of Article 17 implementation and equivalent international copyright approaches by year-end. Recommendation · paragraph 19 · addressed to Department for Culture, Media and Sport Recommendation (the committee's words)
We recommend that the Government publishes its analysis of the implementation of Article 17 of the European Union Directive on Copyright in the Digital Single Market, and equivalent approaches undertaken by countries outside the EU, by the end of the year.
3
Exclude fan tokens from all measurements of fan engagement in professional sports regulation. Recommendation · paragraph 29 · addressed to Department for Culture, Media and Sport Recommendation (the committee's words)
The recent plateaus in professional sports leagues’ revenues and the zero-risk nature of crypto revenue for clubs has incentivised partnerships between professional sport and crypto companies. However, the unique relationship between clubs and fans means that fan speculation on sport-based cryptoassets carries a real risk of financial harm to fans and reputational harm to clubs. We are also concerned that clubs may present fan tokens as an appropriate form of fan engagement in the future, despite their price volatility and reservations among fan groups. We recommend that any measurement of fan engagement in sports, including in the forthcoming regulation of football, should explicitly exclude the use of fan tokens.
4
Mandate the Ministerial taskforce to explicitly review misleading and fraudulent NFT and cryptoasset advertising. Recommendation · paragraph 38 · addressed to Department for Culture, Media and Sport Recommendation (the committee's words)
We welcome the Government’s recently articulated intention to introduce statutory regulation for online advertising, in line with our conclusions and recommendations from our “Influencer culture” inquiry last year. We recommend that the Government respond to the evidence we have gathered on misleading and/or fraudulent advertising for NFTs. It should ensure that any regime compels the entirety of the advertising supply chain take steps to mitigate the risks of harm to consumers from the marketing of NFTs. We further recommend that the Ministerial-led taskforce explicitly reviews the marketing of NFTs and other cryptoassets to address the prevalence of misleading and fraudulent ads.