The US. Department of the treasury is raising the alarm over potential crimes conducted via Non-Fungible Tokens (NFTs).
In a report dubbed “Study of the facilitation of money laundering and terror finance through the trade in works of art”, treasury suggested that the increasing use of art as an investment or financial wallet has become appealing to money launderers, especially where said art is high value.
NFTs are singled out as a big money-laundering opportunity, since according to Treasury, the price of the NFT is determined by the buyer and seller, rather than the market.
“The emerging online art market may present new risks, depending on the structure and incentives of certain activity in this sector of the market (i.e., the purchase of NFTs, digital units on an underlying blockchain that can represent ownership of a digital work of art).”US Dept. of the Treasury
The department outlines scenarios where criminals purchase NFTs using illicit funds, then resell the same to innocent collectors. This cleans up the criminal’s money, and may even make it untraceable.
While we are still in the early days of NFTs, it is clear that the government understands its potential, and is looking for ways to get ahead of the disruption.
In coming months, we might be seeing more and more regulations, as the government develops frameworks.