Fast forward to January 2018, and a little known Turkish football club (Harunustaspor) claimed to be the world’s first football team to purchase a player using Bitcoin. And in November 2021, Perth Heat, who play in the Australian Baseball League, became the first professional sports team in the world to pay all its players and staff in Bitcoin. The self-styled ‘Bitcoin Baseball Team’ announced that it has effectively adopted a ‘Bitcoin Standard’ and has appointed a Chief Bitcoin Officer to shift its corporate treasury from Australian dollars to bitcoin.
Given its rapid growth in adoption, it seems highly plausible that we’ll continue to see Bitcoin further assimilated into the sports industry worldwide. This includes, in the author’s view, everything from player salaries, to transfer fees, to sponsorship deals being paid in Bitcoin. If this occurs it would have a widespread impact on all stakeholders.
This article examines main legal issues this could entail. The article focuses on Bitcoin rather than other cryptocurrencies or crypto assets like NFTs or Fan Tokens. Specifically, it will examine:
- Why Bitcoin is causing such a fuss
- The legal status of Bitcoin
- How Bitcoin is currently being used in sport
- Key legal issues for athletes, clubs and federations
In Bitcoin’s early years, it was anything but mainstream. As described – rather unflatteringly – by the Financial Times, Bitcoin “was an open-to-all-comers, intellectually stimulating online brawl between everyone from hardcore libertarians and bank-hating leftwingers to dedicated “cypherpunks”, a group of privacy-obsessed cryptographers and coders that had coalesced in the 1980s.”. Bitcoin’s use in illicit activity in its early stages didn’t help its image.
However, things have changed significantly in the last few years as Bitcoin has been more widely adopted and become more mainstream. Bitcoin now has a larger market capital than companies such as Facebook / Meta, and a similar market capital to global currencies such as the Swiss Franc. Elon Musk (CEO of Tesla and SpaceX), Jack Dorsey (ex-CEO of Twitter and CEO of Square) and Tim Cook (CEO of Apple) have all publicly stated that they own Bitcoin. Companies like MicroStrategy, Tesla, Square and Paypal hold significant amounts of Bitcoin on their balance sheets. It is estimated that over 200 million people in the world own some form of cryptocurrency. As noted previously, in September 2021, El Salvador became the first country in the world to accept Bitcoin as legal tender. Accordingly, whether you see it as a massive bubble waiting to burst or the digital currency of the future, Bitcoin is slowly achieving a critical mass and working itself into the mainstream financial world.
Bitcoin, cryptocurrencies, blockchain technology (and indeed NFTs and Fan Tokens) are all concepts that younger generations who grew up in a digital world tend to understand and gravitate to in a way that older generations may not. However, it is getting increasingly difficult to ignore the individual athletes, teams, companies and even nation states across the world that are embracing Bitcoin and the principles of sound money and open networks upon which it was built.
The current use of Bitcoin as a payment method in sport is undoubtedly still relatively rare. However, if the adoption continues to increase, this may change in the next few years – particularly as young athletes follow the lead of tech-savvy and entrepreneurial athletes such as Dinwiddie, Culkin, Barkley and Lawrence.
It is often the case that technology leads, and regulation follows. So it will be interesting to see how this payment technology is used by sports stakeholders in the future, and how it will be regulated by sports governing bodies as a result.
This article originally appeared in LawInSport on 3 December 2021.