A fan token is a crypto token, usually branded with a sports club, that lets its holder vote in polls the club runs and take part in rewards and promotions. It is not a share in the club. The largest fan token platform told the EU's markets regulator in 2024 that holders get no return, no dividend and no vote on the club's management or strategy. A fan token is also a cryptoasset that trades on open markets, so its price can swing sharply whatever the perks are worth to a fan.
What a fan token gives the holder
In April 2024 the largest fan token platform described its product in a response to a consultation by the European Securities and Markets Authority (ESMA). It said its fan tokens "predominantly constitute tokenized voting rights" in polls about its partner clubs. Its examples were the goal celebration song, the kit design and the player of the match. Holders can also enter campaigns to win merchandise and other rewards, and they collect loyalty points for activity in the app that can be swapped for prizes.
The same document lists what holders do not get:
- no right to any return or dividend;
- no vote on management, corporate or strategic matters of the club or of the issuer.
A 2023 study in the Journal of Gambling Studies by Lopez-Gonzalez and Griffiths adds two more limits. Buying a fan token does not mean owning a share of the club's capital, and it does not give the right to attend games in the stadium. The polls the authors looked at covered minor matters, such as the music played at half-time.
Utility and governance: what the terms mean here
Utility token. The EU's Markets in Crypto-Assets Regulation (MiCA), Article 3, defines a utility token as a crypto-asset "only intended to provide access to a good or a service supplied by its issuer". The fan token platform calls its fan tokens utility tokens. That is the issuer's own description, not a ruling by a regulator.
Governance. ESMA's guidelines on when a crypto-asset counts as a financial instrument say a utility token may come with governance rights but should not copy the rights attached to financial instruments. A token that lets holders vote on corporate decisions, such as electing board members or approving a merger, would carry rights like those of a share. Fan token polls on songs and kits sit on the other side of that line. ESMA also says authorities should look at what a token actually does rather than the label the issuer gives it, and decide case by case.
How fan tokens are issued
The platform says it launches one branded fan token for each partner, carrying that partner's brand, and that the tokens are minted on the Chiliz Chain. In the same 2024 document it put its partner count at more than 70 sports teams.
New tokens are usually sold first in a Fan Token Offering (FTO). Lopez-Gonzalez and Griffiths describe the typical pattern: a club releases about one million tokens at around two euros each, buyers face purchase limits in the early phases, and the offering often sells out within hours. After the offering, the price is set by supply and demand. Valencia CF's 2021 announcement for its token gave the same starting price of 2 euros. It added that the tokens do not expire, are not used up, and need no subscription.
Fan tokens are bought with another cryptocurrency, not with cash. The issuer says CHZ, the native token of the Chiliz Chain, is the only pairing for fan tokens on its platform, so every purchase or sale there is a swap to or from CHZ. In its 2022 ruling on fan token adverts by Arsenal Football Club, the UK Advertising Standards Authority (ASA) noted that paid-for tokens had to be bought with CHZ. It also noted that even a free token required opening an account with a cryptoasset exchange.
What would a fan token actually give you?
Pick what you want from a fan token to see whether it offers that, and which risks the article flags for that goal.
What do you want a fan token to give you?
- A share of the club or a dividend → Not a share, no dividend
- A say in how the club is managed or run → No vote on how the club is run
- The right to attend games in the stadium → Not a ticket to games
- Votes in club polls and a chance at rewards → next question
- A gain from the token's price → A highly speculative asset
Have you checked whether this token's votes and prize chances grow with the number of tokens held?
- Yes: each vote is multiplied by tokens held → Large holders can outweigh you
- Yes: the rules give holders equal weight → next question
- No, I have not checked → Check the current poll rules first
The club and the platform provide every perk and can change a token's features after purchase. Have you weighed what you would hold if they stopped?
- Yes, I have weighed it → Perks are what fan tokens offer
- Not yet → Your perks depend on the issuer
The issuer says fan tokens give no right to any return or dividend. The 2023 study adds that buying one does not mean owning a share of the club's capital.
The issuer says holders get no vote on management, corporate or strategic matters. Polls cover things like the goal celebration song, the kit design or the half-time music.
The 2023 study says a fan token does not give the right to attend games in the stadium.
Research found fan token prices highly volatile and substantially riskier than established cryptocurrencies, moving with the cryptocurrency used to buy them. A UK regulator called paid-for tokens a volatile, complex investment that could lead to large losses.
Where votes are multiplied by tokens held, a few large holders can outweigh many small ones, and scarce rewards favour holders with more tokens and more app activity.
Vote weighting is documented only in one club's 2021 rules. Rules differ from token to token and can change, so read the current poll and reward rules for that specific token.
The holder has no ownership stake securing the benefits. The issuer can change a token's features, and if the issuing company fails the tokens may lose their utility.
Poll votes, reward campaigns and loyalty points are what the issuer describes. Note that tokens are bought by swapping from CHZ, and the price can still swing sharply whatever the perks are worth to you.
This sorts goals against what the article reports from 2021 to 2024 documents; it cannot check a specific token's current rules, price, legal status where you live or tax, and it is not investment advice.
Fan tokens are cryptocurrencies that permit their holders to access a variety of fan-related membership perks like voting on club decisions, rewards, merchandise designs and unique experiences.
How fan tokens trade
Once the offering ends, fan tokens can be bought and sold on crypto exchanges. Lopez-Gonzalez and Griffiths say this lets them work as collectibles and as speculative assets.
A 2023 study by Scharnowski, Scharnowski and Zimmermann in the Journal of International Financial Markets, Institutions & Money looked at fan token prices. It found that:
- fan token prices are "highly volatile and substantially riskier" than those of established cryptocurrencies;
- fan tokens tend to move together, and with the main cryptocurrencies used to buy them;
- for the publicly listed clubs in the sample, the club's share price and its token's returns were not correlated;
- token returns were lower on days when a club unexpectedly lost a match.
The authors conclude that fan tokens may give some non-monetary benefits but, as financial assets, are highly speculative.
The risks
Concentration: more tokens, more say
Influence over polls can depend on how many tokens a holder owns. Valencia CF's 2021 rules said one token was enough to vote, but each vote was multiplied by the number of tokens held, and more tokens also raised the chance of winning prizes. Lopez-Gonzalez and Griffiths found that scarce, high-value rewards favour holders with more tokens and more activity in the app. A few large holders can therefore outweigh many small ones. Rules differ from token to token and can change, so check the current poll rules for the specific token.
Rights that depend on the issuer
Everything a fan token gives, from polls to prizes and points, is provided by the club and the platform. The holder has no ownership stake that would secure those benefits. Lopez-Gonzalez and Griffiths point out that the issuer can change a token's features after people have bought it, and that if the issuing company fails, the tokens may lose their utility. In the Arsenal ruling, the ASA said cryptoasset services were not regulated in the UK at that time, so buyers could not rely on schemes such as the Financial Services Compensation Scheme.
Small markets and sharp price moves
A fan token typically starts with an offering of around one million tokens, trades mainly against one other cryptocurrency, and moves with that cryptocurrency's price. A market like this can be thin: a few large orders can move the price, and a seller may not get the last quoted price. Lopez-Gonzalez and Griffiths also raise concerns about price manipulation and about fans who buy as supporters being exploited by speculators.
What regulators have said
The ASA's Arsenal ruling, which replaced an earlier ruling from December 2021, said paid-for fan tokens were a volatile, complex investment that could lead to large losses. It also said fan tokens were cryptoassets "regardless of how they were promoted". It ordered that future adverts state that the value of paid-for tokens can fall as well as rise, that cryptoassets were unregulated, and that capital gains tax may apply to profits.
Game-like design
Lopez-Gonzalez and Griffiths found features in fan token apps that resemble gambling products: leaderboards, match predictors, rare rewards handed out at intervals, and daily check-ins designed to keep users in the app. Regulators do not classify fan tokens as gambling, and the authors note the apps carry none of the warnings typical of gambling products.
Questions to answer before buying
- What exactly does this token's poll and reward system offer, and does voting weight grow with the number of tokens held?
- Is the token offered where you live, and how are gains taxed there?
- What would you be left holding if the club or the platform stopped offering perks?
This article explains how fan tokens work. It is not investment advice.
Limitations: the platform and club rules cited come from documents dated 2021 to 2024 and may have changed; no current prices or trading volumes are included.
