Cryptoasset Promotions in Sport

Jim Shannon Excerpts

Tuesday 8th November 2022 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

For the second time today, I am pleased to serve under your chairmanship, Mrs Cummins. I congratulate the hon. Member for Newcastle-under-Lyme (Aaron Bell) for leading the debate, and for his contribution to last night’s Adjournment debate on the financial sustainability of football clubs in England. It was an excellent debate. The Minister was there to respond to it, and I know that he is biting at the bit to respond to this debate, too. I am genuinely pleased to see him in his place; we have all grown fond of him, and we know that we will be more than pleased with his response.

I spoke in the recent Westminster Hall debate on the regulation of cryptoassets. It was clear from the contributions of all Members that there are real concerns surrounding the impact that “online money” can have on society. There is uncertainty; people have invested and been caught out. I understand that the figures for crypto investment are higher as a proportion of the population in Northern Ireland than anywhere else in the United Kingdom. There is an interest for us there, although I am not aware of any football teams or other sporting organisations in Northern Ireland that are involved. That does not mean that they are not, of course; I am just not aware of them at the moment.

As the hon. Member for Newcastle-under-Lyme rightly stated, cryptoassets are becoming more prominent in sports, which are a major source of enjoyment for many in the UK. It is great to be here to discuss these issues. The hon. Gentleman has an incredible interest in and knowledge of this matter, so I am pleased that he has set the scene so well. Sports as an industry has realised the potential that cryptocurrencies and blockchain technologies can bring to further monetise fan engagement, attract sponsors and engage a global market in ways that were unimaginable decades ago. However attractive that may be, it is not always safe, and that is what I want to focus on. I know that the hon. Gentleman has already done so, and we look forward to the Minister’s summing up.

As far as I am aware, there are currently no sports clubs in Northern Ireland enabling the use of cryptoassets; I stand to be corrected, but I am pretty sure that that is the case. As of 6 August, Oxford City became the first football club in the United Kingdom to accept bitcoin for matchday tickets. In March this year, as the hon. Member for Newcastle-under-Lyme referred to, Manchester City announced a global partnership with one of the world’s largest crypto exchanges, OKX. We have seen incidents in the past where similar online products, such as bitcoin, have proven dangerous but at the same time appealing, as they pose as get-rich-quick schemes. It is a bit like doing the lottery on a Saturday. If anyone is as successful as I am—I have not done it for a long time—they will never get anything.

In 2021, Football Index went bust after its contractor suspended operations, and it was revealed that customers could lose up to £90 million. I remember that well; it was incredibly scary. For some people, it was a get-rich-quick scheme, but it did not work out. Similarly to cryptoassets, these types of investment companies sound fantastic in theory, as people are told that they will make money quickly and profits will increase over time, but it becomes clear that that is not always the case; indeed, many end up losing their life savings. As the hon. Gentleman referred to, and as he reinforced in last night’s Adjournment debate, many in sports clubs find themselves in incredible difficulty. Many clubs were mentioned last night—the Minister mentioned some of them—and there is a need to have them regulated.

Our sporting industry in the UK is so loved by so many. In my constituency, crowds gather every weekend to watch local football matches, and teams of all ages compete in different leagues, tournaments and cups. We have seen the excitement of fans ahead of the 2022 World cup. There are massive calls for a greater review of the Gambling Act 2005, and for a deeper look at blockchain technology—the quicker the better—which allows participants to review transactions made in digital currency without the need for a central clearing authority. Something is just not right about that, and I hope the Minister will listen to our concerns and give us some encouragement.

We have the Financial Conduct Authority to ensure that things are done correctly, but sometimes, as technology advances and rolls on, it is hard to keep up with all the things that are happening. Unfortunately, the promotion of cryptoassets by sports teams poses new, unheard-of regulatory challenges. The Chancellor must take that into consideration and ensure that cryptoassets are brought into financial regulation. I think that might be a solution; it would certainly give us some peace of mind. Some athletes in the United States are already getting part of their salary in digital money or shares. Cryptoassets must be held to the same high standards for fairness to consumers.

Let me conclude my contribution to this worthwhile debate by saying that this is an issue that we must aim to address UK-wide. The issue will be dealt with at Westminster but it is important that the regional Administrations are kept on board. The Treasury must put the correct provisions in place to ensure our constituents’ financial security. Cryptoassets are becoming incredibly popular, and not just in sport; many employers are considering them as a payroll method—talk about taking a chance with your pay on a Friday night. If we cannot stop this, it is important that we at least take the correct steps to ensure that it is done in the right way.

I am pleased to see the Minister in his place, but the discussions need to take place with the Chancellor and the Minister with responsibility in DCMS. I hope that the Chancellor will maintain regular contact with DCMS Ministers and with the economy Ministers in the devolved Administrations to ensure that all efforts are made to keep up to date with cryptoassets and their impact on our sporting industries. We cannot rule out, either, the role of the Home Office and the police in this matter—I think it is at that level. Some people have done well out of cryptoassets, but many people have not. We need to protect them, and protect the clubs, too.