Stalwart Esports Move To Crypto Raises Questions - So We Spoke to a Lawyer to Learn More
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Stalwart Esports
Indian esports organization Stalwart Esports has announced the acquisition of the Mongolian PUBG Mobile team Astra Academy, winners of the recently concluded PUBG Mobile Pro League (PMPL) - Season 1 2021: South Asia Championship. The organization claims that the acquisition of this lineup has made them the highest paid athletes in PUBG Mobile Esports across the entire South Asian region (excluding India's BGMI players). Stalwart Esports has also stated that it would be exclusively paying its players through cryptocurrencies and that it was looking into issuing fan tokens for its supporters in the near future.
Stalwart Esports acquires Mongolian PUBG Mobile lineup Astra Academy
Stalwart Esports following their withdrawal from the Pakistani PUBG Mobile scene has now acquired the South Asian champions Astra Academy.
Since its formation in December 2020, Astra Academy has been dominating the South Asian PUBG Mobile circuit, winning multiple PUBG Mobile tournaments like Gameling Domination 2020, PMCO - Spring Split 2021: Wildcard, PMIL Phase 3, and more.
Stalwart has further claimed that the acquired lineup is the most expensive across South Asia.
The new Stalwart Esports PUBG Mobile roster is as follows,
STE | Suhbat "Action" Galtsalam
STE | UnuBold "Pika" Erkhembayar
STE | Burenbayar "Top" Altangerel
STE | Bilguutei "Skryyy" Bayasgalan
STE | Jargalsaikhan "Senator" Batkhurel
STE | Apex
Stalwart Esports states that the players will be rewarded with special perks and non-monetary benefits which will be solely based on their performance every month.
In addition to all this, Stalwart Esports revealed that they had incorporated crypto in place of cash in their current balance sheet, as they claim to be the first organization to introduce and officially adopt the crypto and blockchain technology to the esports ecosystem.
Commenting on the same, Zeyan Shafiq - Founder and CEO of Stalwart Esports said that,
Any athlete that we sponsor now will be paid in crypto currencies only. This is because we believe that crypto is the future of the tech savvy gaming industry and there is a huge scope of blockchain tech with esports. It also helps us to make payments from India to Mongolia, where most of our players are from, within 10 minutes, dodging the traditional mode of payment, which would usually take weeks to transfer the amount to them.Zeyan Shafiq - Founder and CEO of Stalwart Esports
Shafiq went on to say that Stalwart Esports is planning on launching its own fan crypto token for their supporters.
A Legal Perspective Of Crypto Based Salary
Stalwart Esports' move to shift its entire payment model and balance sheet to cryptocurrency and blockchain technology, raises some questions about the legal aspects of such a move in India.
We reached out to Abhishek Subbaiah, Managing Partner of Bridge Legal, a law firm that specializes in niche markets and sectors, to understand the situation and the potential repercussions of this Stalwart Esports decision.
Subbaiah confirmed that this payment model was not against Indian law. "Currently, in India, it’s not illegal as long as requisite due diligence is being carried out with respect to the entity that is being paid; as long as there’s no money laundering or illegal financing activity occurring, and adequate records of transactions and payees are maintained, it’s not against the law (yet). Oh, and there’s also the taxation authorities that need to be satiated."
However, when we implored him about the future consequences if the Indian government decides to 'regulate' the crypto space, Subbaiah stated, "‘Regulate’ is a very euphemistic term to use here – it’s still looking like India’s parliament is going to ban all private Cryptocurrencies, but there’s some hope in the market and its allied lobbies currently that some form of ‘calibrated’ approach will be preferred; it’s all conjecture currently and anyone’s guess."
In April 2018, the RBI issued a circular instructing banks to deny banking services to customers or entities dealing with virtual currencies like Bitcoin. However, on 4th March 2020, the Supreme Court of India struck down this circular legally enabling cryptocurrency transactions once again. However, the Indian government is reportedly working on a bill titled 'The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021', which will prohibit all private cryptocurrencies within the country.
"If India continues on this path that it’s on to ban all private Cryptocurrencies, the organization will need to wind down or completely stop its operations of using Cryptocurrency(ies). If it’s a globally issued and accepted Cryptocurrency, the players will nevertheless be able to use such Cryptocurrency that they were paid in as long as it isn’t illegal in their own country(ies)," Subbaiah added.
He also expressed concerns about Tether (USDT), a stable cryptocurrency that Stalwart Esports is planning to use for its balance sheets, at the moment. "It appears that Stalwart is only trying to use USDT for now (officially known as Tether) – a ‘stablecoin’ that is pegged to the value of the US Dollar (USD), therefore marketed to be less volatile unlike other Cryptocurrencies," said Subbaiah.
He added, "Of course, Tether has had its own share of issues, primarily around questions of (1) whether it actually holds reserves of USD based on which it issues USDT (the ratio is supposed to be 1:1 but that’s not currently the case); and (2) whether it has any legal obligation whatsoever to provide owners of USDT with USD if they so request. The answer to both questions is ‘no’."
Stalwart Esports is also planning to issue fan tokens by partnering with a crypto exchange. Globally, multiple esports organizations like Na'Vi, OG and Vitality have also issued fan tokens stating that it would help them engage with their fans.
Subbaiah commented on this matter by stating that the value of Stalwart's fan token is going to be tricky to determine. He added, "We’re going to need to read the Whitepaper to understand exactly what they have in mind, but in essence, it would be akin to AFK Gaming issuing ‘AFK points’, which can be traded, redeemed, et cetera – could one possibly buy some bread with AFK points? Only if a baker is willing to part with bread for AFK points. It will boil down to whether the market values it as a form of currency."
Disclaimer: Please note that this article, including excerpts from third-parties, is in no way purported to be legal advice and neither AFK Gaming, its constituents, nor the third-parties quoted in this article shall be liable as a result of any action being undertaken on the basis of the content of this article.
