Sports crypto tokens and how they can be included in estate planning

One of the areas where the phenomenon of cryptographic tokens has been gaining ground is in sports. When the stadiums were empty and the hits to the ball, plus the shouts of players and coaches, reached us from the screens with an unusual sound, the phenomenon of the “fan tokens”, which allow their owners to have a certain decision-making power over aspects of the club they are fans of and access benefitsaccelerated its expansion during the pandemic, allowing clubs to generate a new source of income and maintain, or even strengthen, ties with their fans.

According to the specialized site Fan Tokens Rank, this market today already moves USD 550 million and could reach USD 10,000 million in the coming years, expanding to other sectors that seek to capitalize on the relationships of admiration and/or fanaticism they possess.

These tokens are crypto assets issued by clubs (or athletes) looking to capitalize relationships with their followers, generating greater “engagement” or interaction that they can in turn capitalize on through exclusive offers and products for those who own said tokens, who can take part in making certain decisions. These, they are usually acquired through the platform of the issuer – for example, the club’s website – and also listing on a third-party platform, such as an exchange.

Examples of decisions in which the fanatic could participate in making through his token are the mural that will adorn your team’s locker room and the design of the captain’s armband or the mask of the players. Additionally, these tokens allow buyers to participate in more tangible actions such as participate in much smaller draws that if they were open to the public, be it for meet the players or go on guided tours around the stadium, as well have preferences at the time of an exclusive sale of a certain collection itemamong other alternatives.

River announced the commercial alliance with the Chiliz company to launch its own fan token through the application. The asset was named $RIVER, and will be visible in the pant that Marcelo Gallardo’s team will wear in each game. Núñez’s club signed a contract with the platform for USD 27.5 million over five years, until 2027. Clubs like Independent, Racing and San Lorenzo joined to this business that achieved even more notoriety when it transpired that PSG had used fan tokens to pay part of Lionel Messi’s contract.

According to the lawyer Martín Litwakthe issuance of fan tokens has as its background the need for sports entities, not just football clubs, to seek alternative forms of income, strengthen and, above all, monetize ties with their fans around the world, even if they live far away. thousands of kilometers and cannot buy tickets to watch the matches.

They manage to expand their brand beyond the physical limits of the number of seats in their stadium and the geographical limits where their fans settle, in addition to monetizing a whole set of services and emotional intangibles that surround the life of the club. The possibilities to capitalize on such admiration and fanaticism through ‘fan tokens’ are numerous, and will depend on the activities of those who issue them.”, he explained.

In this line, according to the accounting and consulting firm Deloitte, sales in the top 20 revenue-generating clubs in Europe collapsed 12%, to USD 9.9 billion in fiscal year 2020, solutions such as those provided by tokens and other digital species can become an interesting alternative for the future of the sports industry.

In Spain, one of the soccer teams that launched its token was Atletico Madrid. He did it in January 2020 and had a starting price of 2 euros, which rose to 15 a few months after it was issued. Later, in the 21/22 season, teams like Barcelona, ​​and Valencia in the Spanish League or Inter Milan in Italyannounced the issuance of their tokens.

Beyond the emotional ties that they can generate, and even if they are far from cryptocurrencies and NFTs at this point, fan tokens have an economic value and therefore a price at which they can be bought and sold, which fluctuates based on supply and demand, as if it were a stock listed on the Stock Exchange. Therefore, they can also acquire the character of an investment, with the intention of doing business with them, regardless of whether or not one is a fan of the club that issued the token. One of the issues that must be taken into account when planning for this type of asset has to do with image rights, intellectual property and others that may be contained and/or transferred through said fan token, especially if there are third parties. involved. An example of this is the recent case between Binance, SeSocio and the AFA, who are in a legal dispute because the AFA has agreed with Binance to issue new tokens, when it already had an agreement with SeSocioLitwak said.

These tokens are already considered active and as such are “subject to the same considerations as other types of possessions, whether it be cars, houses, bank accounts, both from the legal point of view and from the tax and patrimonial point of view”, assures Litwak, is the founder and CEO of Untitled Strategic Legal Consulting, a legal services boutique dedicated to these issues.

For Litwak, as an economic value, fan tokens fall within the realm of estate planning by the two most common ways of those who want to be neat and careful with their possessions: to anticipate the form that these will be bequeathed or given in custody in the face of old age, death or incapacitating illness, or to defend them from the fiscal voracity of the states.

However, since they are cryptoactive, they will be stored in a virtual wallet, “on which we must pay special attention when planning our heritage, given the great value that these can reach, as well as the affective ties they represent”, expanded Litwak.

These assets come with their own set of risks and specific considerations in regards to their preservation, protection and possibility of including them in estate planning. Both tokens and NFTs and other digital assets will be increasingly integrated into the normal existence of capital or personal fortunes. Estate planning for this class of assets will be increasingly necessary, not only for succession purposes, but also when structuring its issuance”, concluded the expert.

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