Scuderia Ferrari Terminates Contract with Crypto Company Sponsor, Here's the Reason

Scuderia Ferrari, broke its contract with a crypto company. (photo: twitter @ScuderiaFerrari)

JAKARTA - Scuderia Ferrari, the racing division of luxury car manufacturer Ferrari, joins a growing list of Formula One racing teams to end a partnership with their cryptocurrency sponsor.

Ferrari exited its multi-year partnership deals with Velas Blockchain and chip manufacturing giant Snapdragon, resulting in a cumulative loss of $55 million for the Italian team ahead of the 2023 season.

According to RacingNews365, the Ferrari-Velas partnership from 2021, set at USD 30 million (IDR 466 billion) per year, is aimed at increasing fan engagement through non-fungible tokens (NFT) and other joint initiatives. However, the team did not comply with the clause allowing Velas to create NFT images.

In November 2022, Mercedes also lost $15 million after suspending its partnership with FTX because the crypto exchange filed for Chapter 11 bankruptcy.

Red Bull Racing's partnership with the Tezos Foundation suffered a similar fate as the blockchain company reportedly decided not to renew its agreement citing a strategic misalignment.

Toto Wolff, team principal and CEO of the Mercedes-AMG Petronas F1 Team, warned that other teams could face similar situations. However, the relationship between F1 and the crypto ecosystem goes beyond partnerships.

In October 2022, Formula One filed for the 'F1' trademark as it disclosed plans to set up an online marketplace for cryptocurrencies, meta tokens, digital collectibles, crypto collectibles and NFTs.

Amidst a sluggish market, the Web3 project is taking the lead to strengthen the interaction between fans and sports leagues.

Deloitte's “2022 Sports Industry Outlook” report predicts an acceleration in the mix of real and digital worlds, as the market for NFT and immersive technologies grows. As Cointelegraph reports, the lack of an easy-to-use platform is the biggest challenge to mainstream adoption.