The Treasury Department is taking a closer look at NFTs, saying these digital assets can facilitate money laundering and other illicit activities.
Un report recent, published by the United States Department of the Treasury, indicates that NFTs or non-fungible tokens They can become instruments that facilitate illicit activities, especially money laundering. The government agency noted that the trade in these digital assets, which occurs over the Internet without geographical limits, can create new opportunities for malicious actors to use illegal money to make legitimate purchases.
The report, which is titled “Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art”, indicates that the inherent qualities of the NFT market may make this space increasingly attractive for money laundering and money laundering.
In the world of NFTs, there are digital artworks of great value that are increasingly viewed as investment assets, the report notes. In addition, the number of collectors and participants in this market is increasing, which can create a favorable ecosystem for illicit actors. In addition, the US Treasury identifies individual P2P and pseudo-anonymous money transactions that are carried out with cryptocurrencies, and the lack of need to transport digital works of art, as key elements that can assist illicit activities.
To address potential risks, the Treasury hints at possible regulation in its report, noting that the government can implement regulatory and non-regulatory measures to foster transparency within the digital art market.
It may interest you: Ryan Wyatt leaves YouTube for Polygon Studios as platform looks to add NFTs
The role of NFTs in money laundering
The US Treasury Department report comes shortly after the prestigious forensic analysis firm blockchain Chainalysis will publish its own report on the matter.
Last week, blockchain analytics firm said that illicit activity through NFTs has seen a significant increase in the last year. However, he also noted that the illegal volume moving through these digital assets continues to be tiny compared to the illegal volume moving in the world of cryptocurrencies, which, in turn, is barely a 0,1 % of the volume of illicit operations in general.
In its Market Intel tool, Chainalysis notes that thanks to the transparency of the blockchain, it is possible to track the flow of assets to and from illicit services. It also notes that while illicit funds are serious and can reach significant amounts for many, they currently represent a small minority of total illicit funds.
In relation to the art world, Chainalysis specified that money laundering in the physical fine art market has long been a major problem, highlighting that it is quite difficult to quantify the value that moves illegally within this sector due to the payment methods used, mainly cash. However, in reference to the world of digital art based on NFTs, the firm points out that like any new technology, these assets are being used by malicious actors to commit their crimes. However, unlike the physical art world, the inherent transparency of blockchain technology allows for more reliable tracking and estimations of money laundering crimes based on NFTs.
Continue reading: China creates non-crypto NFT platform on Blockchain Services Network
