US Treasury targets NFTs for potential laundering of high-value art money

The U.S. Department of the Treasury has released a study on the high-value art market, highlighting the potential in the non-fungible tok...



The U.S. Department of the Treasury has released a study on the high-value art market, highlighting the potential in the non-fungible token (NFT) space to conduct illicit money laundering or terrorist financing operations.

The Treasury’s “Study on the Facilitation of Money Laundering and Terrorist Financing through the Trade in Works of Art” suggested that the increasing use of art as an investment or financial asset could make high-value art exchanges vulnerable to money laundering:

“The emerging online art market may present new risks, depending on the structure and incentives of certain activities in this market sector (i.e. the purchase of NFTs, digital units on an underlying blockchain that can represent ownership of a digital artwork).”

the to study highlights the importance of NFTs in representing ownership of digital and physical property that is managed and controlled through smart contracts and digital wallets. The Treasury also clarifies that the price of NFTs is determined by the buyer and the seller and not by the market:

“According to US authorities, in the first three months of 2021, the NFT market generated a record $1.5 billion in trade and grew 2,627% from the previous quarter.”

However, the NFT market in 2020 alone was valued at over $20 billion. The US Treasury has suggested a possibility where criminals can purchase NFTs with illicit funds and resell them to an unwary collector “who would compensate the criminal with equity unrelated to a prior crime.”

NFTs can also be sold through peer-to-peer (P2P) sales, eliminating the need for a middleman or recording the transaction in the public ledger. While outlining the various money laundering vulnerabilities enabled by the NFT ecosystem, the Treasury concluded:

“In addition, traditional industry participants, such as art auction houses or galleries, may not have the technical understanding of distributed ledger technology required to practice effective identification and verification of customers in this space.”

Related: NFTs and DeFi reverse a banker’s generational poverty curse in 2 years

Brenda Gentry, a USAA mortgage underwriter turned crypto entrepreneur, recently shared how the cryptocurrency ecosystem has offered her a chance to beat the generational curses of poverty.

Gentry, aka MrsCryptoMomquit his decade-long job as a banker to pursue a full-time career in crypto, as his initial investments in early 2020 confirmed the “unprecedented opportunities offered by crypto.”

Recognizing the large learning curve in crypto, Gentry provides educational content through its website:

“I also run seminars to educate the general public on navigating this space and what to look out for when looking for good NFT projects or DeFi tokens, as well as how to spot scams or drawdowns early. carpet.”