The UK’s Culture, Media, and Sport Committee is raising red flags over the potential for widespread copyright infringement in the non-fungible token (NFT) space.
In a report published today, October 11, the committee called upon the UK Government to collaborate in addressing concerns associated with the burgeoning use of NFTs.
The primary concern revolves around the unauthorized sharing of creators’ works with the public — leading to copyright infringement. The report underscores the need to safeguard creators’ rights and maintain the security of their intellectual property in the NFT ecosystem.
The committee suggests that the UK Government should address the impact of “safe harbor provisions” by introducing a code of conduct applicable to NFT marketplaces operating within the UK. This code of conduct would protect creators, consumers, and sellers against the proliferation of infringing and fraudulent content.
In a separate section of the report, the spotlight is on concerns associated with NFTs in the sports industry. It brings to light NFT platforms that enable sports clubs and leagues to monetize their fan bases on a global scale. However, the report underscores a significant concern: the inherent volatility of cryptocurrencies, which could lead to substantial financial losses for sports clubs and fans investing in these NFT-based assets.
In response to these concerns, the committee advocates for the establishment of regulations that explicitly prohibit the use of fan tokens to protect fans from potentially severe financial losses.
In the report’s final section, the focus shifts to the risks associated with NFT-related advertisements. The committee calls upon the government to ensure that any regulatory framework compels the entire advertising supply chain to implement measures to mitigate the risks of harm to consumers arising from NFT marketing practices.
It recommends the establishment of a Ministerial-led task force to comprehensively review NFT and other crypto asset-related advertising activities. The aim is to address the prevalence of misleading and fraudulent advertisements that can lead to financial harm among consumers.
This is another instance of a government entity expressing concerns regarding the use of Web3 technologies. In August, the Chinese government announced plans to integrate its social credit system into the metaverse, aiming to bolster safety and address potential risks linked to online interactions.