The US Treasury Department is concerned about NFT money laundering crime

The US Treasury Department is concerned about NFT money laundering crime

The growing popularity of digital artwork as a highly regarded immutable token (NFT) is now a major financial red flag because the U.S. Treasury Department believes they could be a vital means of money laundering.

According to to the new “Study on Facilitating Money Laundering and Terrorist Financing through the Art Trade” conducted by the Ministry of Finance, the claim that money launderers can hide behind NFTs to transfer large sums of money is very high.

“The emerging online art market may pose new risks, depending on the structure and incentives of certain activities in this market sector (ie the purchase of NFT, digital units on a basic blockchain that may represent ownership of digital artwork),” the report said. .

NFTs have become more popular in the last 2 years as collections like CryptoKitties and the Bored Ape Yacht Club (BAYC) have begun to set prices at very high estimates. While inherited NFT markets like OpenSea have hit monthly transactions amount to more than $ 4 billion, showing how well collectors inject capital into the market, and it’s not uncommon for NFT artworks to cost millions of dollars. Blockchain.News logged in in March 2021 that Beeple’s “Everydays,” a collage of the artist’s works in 5,000 days, sold for $ 69 million in Ethereum.

Given that such great values ​​are possible, the Ministry of Finance claims that someone who laundered certain funds can easily use them to buy NFT to a seller who has no doubts and resell it in order to get clean cash. The fact that such transactions can take place Peer-2-Peer (P2P) even makes them impossible to track, which is another concern of the regulator.

While traditional auction houses have begun to hold NFT-focused auctions, the department believes they may not have the technical expertise to conduct proper verifications.

“Moreover, participants in traditional industries, such as art auction houses or galleries, may not have the technical understanding of distributed book technology needed to effectively identify and verify buyers in this space,” the report said.

With the current focus on NFT, the emergence of new regulations to combat space in the medium and long term will come as no surprise.

Image source: Shutterstock



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