The US Treasury has published a high-value technical market study that highlights the potential of the NFT (Non-Fungible Token) website to carry out illicit money laundering or terrorist financing.
The “Treasury Department Study on Facilitating Money Laundering and Terrorist Financing through Art Trade” states that the increased use of art as an investment or financial asset can make the trade in high-value artworks vulnerable to money laundering:
“The emerging online art market may present new risks depending on the structure and incentives for certain actions in this market segment (for example, the purchase of NFTs, digital devices on the underlying blockchain that can represent ownership of a digital artwork).”
The study highlights the importance of NFTs in representing digital and physical ownership that is managed and controlled through smart contracts and digital wallets. Treasury also notes that the price of NFTs is determined by the buyer and seller, not the market:
“According to US authorities, the NFT market generated a record $1.5 billion in trading in the first three months of 2021, up 2,627 percent from the previous quarter.”
However, in 2020 alone, the NFT market was valued at over $20 billion. The US Treasury has suggested that criminals could buy NFT with illicit money and resell it to a neglected collector who “will compensate the offender with net money unrelated to the previous offense.”
NFTs can also be sold through peer-to-peer (P2P) sales, which avoids the need for an intermediary or recording a transaction in the public ledger. By highlighting the various money laundering vulnerabilities made possible by the NFT ecosystem, the Treasury concluded:
“Furthermore, traditional industry players such as art auction houses or art fairs may not have the technical understanding of distributed ledger technology necessary to effectively identify and verify customers in the field.”
Related Topics: NFT and DeFi Rid Banks of Curse of Generational Poverty in 2 Years
Brenda Gentry, an American lender turned crypto entrepreneur, recently shared how the crypto ecosystem has given her a major opportunity to overcome the generational curse of poverty.
Gentry, also known as MsCryptoMom, left her decade-long job as a banker to work in the crypto space full-time when her first investment in early 2020 confirmed the “unique opportunities that crypto offers.”
Gentry acknowledges having a great learning curve in coding and offers educational content on their website:
“I also run workshops to educate the public on how to navigate the field and what to look for when looking for great NFT projects or DeFi tokens, as well as how to spot scams or scams quickly.”