Last week, European football's governing body. UEFA, announced a sponsorship deal with Socios.com, a cryptocurrency company which sells "fan tokens" which can only be bought through its own blockchain called Chiliz.

Socios fan tokens are digital assets which fluctuate in value, as with any cryptocurrency. Fan token owners receive perks and can occasionally vote on minor club issues.

Football Supporters Europe said it was "appalled" by UEFA's deal. "This is an incomprehensible move at a time when football needs protection from cryptomercenaries," it said in a statement.

It's part of a trend that has seen various cryptocurrency companies and platforms invest heavily in professional football over the last two years.

Seventeen of England's 20 Premier League clubs have at least one commercial deal with a company in the cryptocurrency sector, with six, including Arsenal and Manchester City, already signed up with Socios.

Some, such as Watford and Southampton, carry cryptocurrencies as the main sponsor on their jerseys. Watford also carries the logo of Dogecoin — a "joke" cryptocurrency associated with Elon Musk — as a shirt sleeve sponsor.

Socios has agreements with clubs and leagues across Europe and South America, while several other cryptocurrency sector companies have struck major commercial deals in the likes of Turkey, Italy and Argentina.

Another strand of football's growing relationship with cryptocurrency is the NFT (nonfungible token) sector, with both clubs and national leagues developing their own digital assets — such as pictures or videos — to be bought and sold. Several high-profile footballers, including Brazil star Neymar, have also begun to heavily promote the assets (see tweet below).

So far, no clubs from Germany's Bundesliga have signed up to Socios. However, earlier this month, TSG Hoffenheim announced an NFT partnership with the cryptocurrency Babydoge while the Bundesliga agreed an NFT partnership with Sorare in late 2021.

Engaging fans' wallets

The cryptofootball boom has raised alarm given the wider concerns around risks the largely unregulated sector poses to financial stability. Last week, a body which makes financial recommendations to the G20 said rules covering the digital asset market needed to be urgently enacted.

Martin Calladine, an investigative reporter and the author of "The Ugly Game," told DW he believed "a perfect storm" had led to football's embrace of crypto, with the pandemic fueling both a dramatic rise in cryptotrading (the global market value of the cryptosector has increased by more than 500% in the past two years) and a funding crisis in professional football.

He believes the main aim of so-called "fan engagement" services offered by firms like Socios is to encourage people to buy the company's cryptocurrency.

"It is perfectly apparent that the majority of these tokens are not held by fans of the clubs," he says. "And even when they are purchasing them, it is not because they want to express their loyalty or sense of engagement. They are buying it because there is an opportunity to make a profit."

Calladine says the fact that anyone can buy a club's tokens, and not just fans of that club, suggest it is not a meaningful fan engagement tool. A recent first-time sale of tokens for Premier League club Crystal Palace showed that more than 90% who bought tokens had purchased other clubs' tokens previously.

He also points out that the polls upon which token owners can vote are largely about meaningless issues and have low participation rates.

"It cannot be the case that this is a fan engagement product, unless this is the worst fan engagement product in the world," he said.

Socio CEO Alexandre Dreyfus insists the company's tokens are for fan engagement rather than investment.

"A fan that wants to vote will never trade and most of them will never trade," he told the Sportspro StreamTime podcast recently. "You have fans who bought at €2 [$2,3] and sell when it's at €10 but...who can blame them?"

Dodgy companies

Calladine says the speed and development of the Socios brand has been "remarkable". Yet there are concerns around the business bona fides of many other companies entering the field.

Back in November, Manchester City announced a partnership with a company called 3Key, described in press releases as a "DeFi-centric crypto company." Just two days later, Man City put the deal on ice after research by Calladine and others found little evidence to suggest that the company or the people purported to be running it actually existed.

Around the same time, Barcelona canceled a deal with NFT company Ownix after the club discovered that executives from the firm were facing sexual assault and fraud charges.

Football: Financially flush, morally bankrupt

Critics like Calladine believe there is a real risk of ordinary fans losing significant amounts of money by investing in cryptocurrency through its association with football. He says demand for tokens is especially strong in football-dominated places like Brazil and Turkey, where there are also considerable economic problems.

"It only exists to suck out people's money, using football as a way of giving it some credibility," he says of the fan token model.

English club Arsenal recently had two ad campaigns for fan tokens banned by the UK's advertising regulator as it said the club was "taking advantage of consumers' inexperience or credulity, trivializing investment in cryptoassets, misleading consumers over the risk of investment and not making it clear the 'token' was a crypto asset."

Calladine is hopeful that a growing sense of urgency around the issue could lead to a regulatory crackdown. However, he points to English football's deep existing commercial relationship with gambling firms, and other controversial issues like Saudi Arabia's recent takeover of Newcastle United, as examples of how the industry tends to absolve itself of moral responsibility once money is at stake.

"It's a marriage made in heaven between the amorality and money hunger of football and the chancers of the cryptoworld," he said. "You can see how happily they dance together."

Edited by: Hardy Graupner