FSA Cryptocurrency working group
Update - 25th July 2022
Cryptocurrency – a dream or a nightmare?
The rollout of cryptocurrency and its involvement in football continues apace. Currently 19 of the 20 Premier League teams (2021-22 season) that have a “part in promoting volatile unregulated financial assets to its fans” (Joey D’Urso 28th June 2022- How the Crypto Crash has impacted each Premier League Club).
Since 2019 and when West Ham United entered a contract with Socios.com, WHUST has been tracking and highlighting issues such as:the lack of regulation, the information around financial risk, the level of ‘consumer protection’, how these products are advertised, the environmental impact, and the exposure of young supporters.
Recently we have been working with the Football Supporters Association (FSA) and other Trusts to strengthen protection for supporters, given the direction of travel for this unregulated financial asset.
This work culmunated with a motion proposed by WHUST and passed at the FSAs Annual General Meeting, countersigned by the majority of Premier League supporter groups as well as some Championship and League 1 groups. This shows the concern there is around cryptocurrency/unregulated assets.
WHUST has also produced a briefing paper on cryptocurrency to help inform and clarify some of the information out there.
We will continue to work with the FSA and fellow Trust/fan representative groups to ensure supporters are properly informed and there is regulation around cryptocurrency.
The text of our motion is below:
We have also published a paper that explains more about the involvement of cryptocurrency companies with football clubs.
Back in April 2019, West Ham United became first English club to announce a partnership with socios.com – a digital platform that uses blockchain to provide paid-for supporter engagement.
Supporters could buy “Fan Tokens” from Socios which gives fans the ability to vote on selected “club decisions, earn club rewards and compete for once-in-a-lifetime experiences.”
A coalition of West Ham supporter groups and independent content creators came together to condemn the club’s attempt to monetise fan engagement. They publicly criticised the club’s deal with Socios and launched the “Don’t Pay To Have Your Say” campaign .
In May 2019, the FSA criticised West Ham United’s partnership with Socios – arguing that it undermined the progress made on supporter-club dialogue by attempting to monetise fan engagement.
FSA chief exec Kevin Miles said: “We worked closely with the Premier League, FA, EFL and the Department for Digital, Culture, Media and Sport to create a set of recommendations which all league and clubs adopted to greater or lesser extent.
“They included many principles around how clubs and leagues should engage with supporters along open, democratic lines.
“The Socios model runs counter to that as it attempts to monetise fan engagement which the leagues and clubs have committed to doing for free.
We produced a fact sheet that outlined our concerns to supporters.
The service that would be provided is a voting platform that can only be accessed by obtaining “Fan Tokens” through being gifted the Tokens via Socios.com, finding Tokens through the Socios.com app in a “Pokemon-Go-esq” augmented reality game or through spending your own money to purchase a crypto currency that then has to be converted into a Token.
WHUISA and others within the West Ham United world came together to denounce the idea that you would need to pay to have your say on matters we feel should be offered for free, without attempting to monetise fan opinion. As a brief overview:
Voting rights are increased by the amount of “Fan Tokens” you possess. Fan Tokens (that are not gifted by Socios.com or found through an in-app game) are only obtained by purchasing a cryptocurrency called Chiliz (CHZ) which then must be transferred into a Fan Token within the app. No CHZ, no Fan Token, no voting right.
CHZ and its value is determined by its performance in online trading market environments. The value of your investment may go up or down dependent on market moves and demand. Cryptocurrencies are currently unregulated in UK jurisdiction.
Anyone can obtain a Fan Token, regardless of who they support, where they live in the world or if they support anyone at all. CHZ and Fan Tokens can be traded freely within the Socios.com app. This will also affect the value of your original investment.
Examples of decisions offered to date through the Socios.com app include:
o Goal celebration music (Juventus)
o Which player takes over the clubs Instagram account for the day (Atletico Madrid)
o The renaming of a training ground pitch (Roma)
o What message features on the captain’s armband (PSG)
These polls were considered “binding” and the club is “duty bound” by its contract with Socios.com to implement the voted for change. In Feb 2020, Juventus offered a “non-binding” poll on adding a feature to their app, a result that can be ignored or discarded in favour of other options if Juventus so wish.
West Ham United have offered no advice to supporters on what to do if they purchase a Fan Token/CHZ and wish to complain or wish to seek recourse. There is no regulatory body anyone can make a complaint to about a cryptocurrency in the UK at present.
Cryptocurrencies are considered “Assets” by the UK Government. What that means is Fan Tokens/CHZ are not considered currency like sterling (£), but an item a person owns like a car or a mobile phone. Where appropriate, assets need to be legally declared on tax forms or benefit claim forms (for example).
In June 2019 at the FSA AGM, WHUISA tabled an emergency motion (seconded by Manchester United SUpporters’ Trust) with regards to opposing Socios.com. The motion stated:
“This Association calls upon West Ham and Socios to suspend the launch of the Socios app pending an inquiry by the PL into this form of monetisation of supporter engagement. The default position is that fans should not pay for the right to express their views on matters of legitimate interest regarding the club they support.”
During a year of campaigning, including Chair Sue Watson being interviewed on television and radio, West Ham delayed the launch scheduled for February 2020. We kept up the pressure and in late June 2000, the Club announced the end of the partnership with Socios without a single “fan token”, the digital currency supporters could buy to vote on issues and events, ever being issued.
In that time, we built up considrable knowledge of “fan tokens” as well as some very useful contacts to help build-up the counter-arguements against their introduction. As a result we have subsequently been working with supporters’ trusts at Arsenal, Everton and Leeds where partnerships with Socios have been announced.
The FSA regard the on-going potential issues with clubs seeking to partner with cryptocurrency initiatives that they have set up a dedicated working group. WHUST is one of the Premier League trust representatives that is working on a response to the partnerships that are developing including having interviews with National and International journalists on why there are concerns with cryptocurrency and implications for supporter engagement.
19th February 2022:
Football Supporters Europe recently spoke to Martin Calladine, author of The Ugly Game and Fit and Proper People, about the emerging relationship between football and cryptocurrencies.
11th March 2022
Football’s crypto king and the missing millions
A five-month Off The Pitch investigation into Socios, which partners 55 football clubs and governing bodies, reveals that crypto payments were withheld from key advisors, seemingly to maintain the value of its chiliZ currency.
A staff member alleges that he lost $10 million due to withheld payments. After a two year wait, angry and frustrated advisors were paid within hours of telling Off The Pitch that they were willing to file legal charges against the company.
A whistleblower who raised concerns about missed payments internally was sacked on trumped up charges of “harassment”.
Why it matters: Serious concerns exist about lack of crypto regulation and football’s rapidly growing love affair with the trend.
The perspective: Socios has become over the past two years an important part of football’s financial eco-system, putting more than $200 million into the game.
Full details at:
https://offthepitch.com/a/exclusive-footballs-crypto-king-and-missing-millions