The US Department of the Treasury warned about the increased use of NFT arts as investments and its potential connection with money laundering. In its latest study on the high-value art market and the relationship with the non-fungible-tokens (NFTs), the government agency notes that there’s enough space to conduct illicit activities.
High-Valuable Art Is Vulnerable to Money Laundering
The study showcases the value of NFTs in representing ownership of digital and physical property. The Treasury also points out that the price of NFT is determined by the buyer and not the seller or the market conditions.
When it comes to the numbers, the latest reports show that NFTs generated a record $1.5 billion in the first three months of 2021. In 2020, the NFT market alone was worth $20 billion.
However, there’s a high possibility that a criminal might purchase NFTs with illegally obtained cryptocurrencies and then resell them to another person who would compensate the criminal with legit funds.
What’s more, NFTs can be traded via P2P sales that completely bypass the need for intermediaries and the marketplace.
Finally, the Treasury concluded that traditional artists like auction houses or galleries lack the knowledge and technical understanding that’s necessary for effective customer identification and verification.