NFT
The US Treasury warns that NFTs may pose new illicit finance risks
The U.S. Treasury department warned that non-fungible tokens (NFTs), could pose new risks for illicit finance. According to industry estimates, the NFT market could reach $35 billion in 2022 and more than $80 billion by 2025.
NFTs May Present Illicit Finance Risks
The U.S. Department of the Treasury announced Friday the release of a “study on illicit finance in the high-value art market.” The study was mandated by Congress in the Anti-Money Laundering Act of 2020.
“This research examined the art market participants, and the sectors of high-value market art that could present money laundering or terrorist financing risks for the U.S financial system,” the Treasury stated.
The emerging digital art market, such as the use of non-fungible tokens (NFTs), may present new risks, depending on the structure and market incentives.
The study suggests several options to mitigate the risks. These include updating law enforcement training, improving information sharing between the private sector and applying anti-money laundering to certain art market participants.
According to Dappradar, NFT sales volume totaled $24.9 billion in 2021, compared to $94.9 million in the previous year. Jefferies’ analysts have estimated that the market for NFTs could reach $35 billion in 2022 and more than $80 billion by 2025.
The rising popularity of NFTs has attracted fraudsters and raised concerns among regulators.
“Scams claiming big returns on cryptocurrencies are flooding the Internet,” T. K. Keen (administrator for the Division of Financial Regulation of Oregon) warned in January. Before purchasing cryptocurrencies or NFTs, investors should thoroughly research the risks and make sure they understand them .”
What do you think about the Treasury’s warning about NFTs? Comment below.
Kevin Helms
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection of cryptography and economics.
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