Pushback to football clubs paying international transfer fees with crypto

in LeoFinance2 years ago

Pushback to football clubs paying international transfer fees with crypto

Direct from the desk of Dane Williams.




After Galoppo’s move from Banfield to São Paulo, we take a look at the pushback to football clubs paying international transfer fees with crypto.

News of football clubs paying international transfer fees with crypto has been in the news this week.

We just saw Brazilian giant São Paulo use collateralised stablecoin USDC to pay a fee to Argentina's Atlético Banfield for midfielder Giuliano Galoppo.

YouTube screenshot of Giuliano Galoppo moving from Banfield to São Paulo.

While the exact fee remains undisclosed, it’s estimated to be somewhere in the vicinity of 8 million USD - Quite the pretty penny, let alone for mid table clubs in South America.

On the surface paying international transfer fees with crypto seems like a fantastic use case for crypto.

One that genuinely solves the real world problems of cumbersome cross border payments and exposure to currency risks.

But as is so often the case, pushback from governments and the legacy financial system has seen this spun as a negative.

What a mess.

There is so much potential for football and crypto

When it comes to the relationship between football and crypto, I’ve been extremely critical of its implementation.

Via the junk they brand as fan tokens, clubs have shamelessly gauged what has turned out to be primarily their foreign fanbases.

Offering them worthless tokens with literally zero use case.

All of the crap they offer fans can be better served by paying membership fees and putting your name in a database.

Football fan tokens are a scourge on both the game and crypto industry as a whole as all they do is give the game’s journos a chance to call them out.

So yeah, I’m certainly not a fan.

When it comes to paying international transfer fees with crypto however, it all changes.

Football now has a legitimate use case for crypto that benefits the clubs, the players and ultimately the fans.

Using crypto to pay international transfer fees is faster, cheaper, easier and much more efficient for both parties.

The fact it's being reported as somehow a negative in our very own crypto media, is nothing short of hilarious.

Talk about shooting ourselves in the foot.

The issue with paying international transfer fees with crypto

The crux of the issue here is not a football specific problem, but a business problem.

Argentina’s current foreign exchange restrictions mean exporters are forced to convert any incoming US dollars into Argentine pesos within five days of the transaction.

Using the stablecoin USDC avoids the Central Bank of Argentina (BCRA) and while the bank’s regulations do not explicitly mention the word crypto, they are going to run into problems.

The use of crypto also creates other difficulties for Banfield. For having used crypto, the cheaper, faster and more efficient option, Banfield is going to find itself banned from the transfer market for 90 days.

In the central bank’s view, incoming players are nothing more than imports and for not bleeding cash via pesos, they will be punished.

If Banfield had followed the central bank’s rules and liquidated their USDC into pesos before transacting, they would have been forced to in a local market where the US dollar quotation is actually 130% higher than its actual market value.

As a result of the downright ridiculous central bank of Argentina policies, the use of crypto to solve the issue of exchange rate risk has been completely undermined and Banfield will likely be worse off as a result.

You seriously can’t make this shit up.

Where the use of crypto to pay international transfer fees in football should be celebrated as a win for the people, we are seeing it portrayed as some sort of criminal evil.

“How dare you don’t use the completely inefficient legacy system and pay through the nose due to the corrupt government’s economic mismanagement.”

This is the world we live in.

Best of probabilities to you.

Posted Using LeoFinance Beta

Sort:  

The transfer fee was paid in usdc and because it doesn't work out well for banfield doesn't mean is a bad idea. It is the most easiest and secure way to sign a player, I just hope it's getting better in the near future

Posted Using LeoFinance Beta

I have no doubt that when it comes to paying international transfer fees with crypto, that efficiency will win over the long term.

But like everything, we've gotta get through the pushback period by the legacy system.

Posted Using LeoFinance Beta

Wow it is kind of a surprise to hear such transaction with Crypto in football.

Pretty cool, right? :)

Just like any business that conducts cross-border payments, it's cheaper and more efficient to use crypto for international football transfers fees.

It will be the norm eventually.

Posted Using LeoFinance Beta