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

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


The US Treasury Department recently released a report on the high-value art market, underlining the possibility for illicit money laundering and terror funding in the nonfungible tokens (NFT) arena.

In fact, according to the Treasury Department’s “Study on the Facilitation of Money Laundering and Terrorist Financing via the Trade in Works of Art,” the growing usage of art as an investment or financial instrument could render high-value art trades vulnerable to money laundering:

“The structure and incentives of certain activities in this part of the market (for example, the purchase of NFTs, digital units on an underlying blockchain that might represent ownership of a digital work of art) may introduce new risks in the rapidly expanding online art market.”

The importance of NFTs in reflecting digital and physical property ownership highlighted in the study. Using smart contracts and digital wallets, this is well under control. The Treasury further points out that the buyer and seller, not the market, set the price of NFTs:

“The market for NFTs generated a record $1.5 billion in trade in the first three months of 2021, according to US officials, rising 2,627% from the previous quarter.”

Peer-to-peer (P2P) sales allow NFTs sales without the use of an intermediary

The NFT market, on the other hand, was estimated to be worth over $20 billion in 2020. The US Treasury suggested that criminals may buy NFTs with illegal cash. And then resell them to an unsuspecting collector. “Who would compensate the offender with clean funds unrelated to a prior crime.”

Peer-to-peer (P2P) sales allow NFTs to be sold without the use of an intermediary. Or the need to record the transaction on a public ledger. The Treasury concluded, while highlighting the multiple money laundering vulnerabilities enabled by the NFT ecosystem:

“Moreover, established industry players like art auction houses and galleries may lack the technical knowledge of distributed ledger technology required to practise efficient customer identification and verification in this arena.”

Cryptocurrency ecosystem gives an opportunity to break free from poverty

Brenda Gentry, a former USAA mortgage underwriter who went on to become a crypto entrepreneur, recently spoke about how the cryptocurrency ecosystem gave her a fighting opportunity to break free from poverty’s generational curse.

Gentry, a.k.a. MsCryptoMom, quit her ten-year job as a banker to pursue a full-time crypto profession. After her early 2020 investments proved the “unique prospects given by crypto.”

Gentry recognises the steep learning curve in crypto and provides educational content on her website:

“I’m also holding seminars to teach the general public on how to navigate this sector. And what to look for when looking for reputable NFT projects or DeFi tokens. As well as how to spot scams or rug pulls quickly.”

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