Ferrari, a manufacturer of high-end sports cars based in Italy, has ended its multi-year partnership with blockchain startup Velas and chip industry behemoth Qualcomm. Due to this decision, the Italian squad will lose $55 million before the 2023 season even begins. Scuderia Ferrari, Ferrari’s racing division, announced their partnership with Velas before the end of 2021. At the time, several other Formula One teams were eager to form alliances with cryptocurrency companies.
There has been a recent trend of Formula One racing teams severing ties with cryptocurrency sponsors, and Scuderia Ferrari has joined that list. The previous twelve months have seen a dramatic shift in the market, as cryptocurrencies and blockchains have seen huge value losses. The most glaring illustration of the instability and precariousness of cryptocurrency sponsors in Formula One is the collapse of Mercedes’ official crypto partner, FTX, towards the end of 2022.
Starting in 2021, Ferrari and Velas were to work together on a $30 million annual basis to increase fan engagement via the use of non-fungible tokens (NFTs) and other joint efforts. Nonetheless, RacingNews365 reports that the team did not follow the rules that allowed Velas to make NFT photographs. The Tezos Foundation allegedly opted not to extend its arrangement with Red Bull Racing, citing strategic mismatch, ending the blockchain platform’s collaboration with the racing team.
CEO and Team Principal of the Mercedes-AMG Petronas F1 Team Toto Wolff expressed concern that other teams would face a similar predicament. However, the ties between F1 and the crypto industry go beyond simple collaboration. With the announcement of its intent to launch a digital marketplace for cryptocurrencies, meta tokens, digital collectibles, crypto collectibles, and NFTs in October 2022, Formula 1 filed “F1” tokens.
Putting a stop to their collaboration with Velas might be seen as part of a larger wave of crypto resistance in Formula 1. In light of Mercedes’ decision to sever connections with FTX a few months ago, when the company saw a significant decline, Ferrari may have contemplated doing the same. It seems that no organization wants to be linked with crypto’s dwindling market dominance.