US Treasury targets NFTs for potential high-value artwork cash laundering

The U.S. Department of the Treasury launched a examine on the high-value artwork market, highlighting the potential within the nonfungible tokens (NFT) house to conduct illicit cash laundering or terror financing operations.

The treasury’s “Study of the facilitation of money laundering and terror finance through the trade in works of art” urged that the rising use of artwork as an funding or monetary asset might make the high-value artwork trades susceptible to cash laundering:

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

The examine underlines the significance of NFTs in representing possession of the digital and bodily property that’s managed and managed through good contracts and digital wallets. The treasury additionally factors out that the value of NFTs is decided by the customer and vendor and never the market:

“According to U.S. authorities, in the first three months of 2021, the market for NFTs generated a record $1.5 billion in trading and grew 2,627 percent over the previous quarter.”

However, the NFT market in 2020 alone was valued at greater than $20 billion. The U.S. treasury urged a chance the place criminals can buy NFTs with illicit funds and resold to an unwary collector “who would compensate the criminal with clean funds not tied to a prior crime.”

NFTs can be bought through peer-to-peer (P2P) gross sales, which bypasses the necessity for an middleman or recording the transaction over the general public ledger. While underscoring the assorted cash laundering vulnerabilities made potential by the NFT ecosystem, the treasury concluded:

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

Related: NFTs and DeFi overturn a banker‘s generational curse of poverty in 2 years

Brenda Gentry, a USAA mortgage underwriter turned crypto entrepreneur, lately shared how the cryptocurrency ecosystem provided her a combating likelihood to beat the generational curses of poverty.

Gentry, a.ok.a. MsCryptoMom, left her decade-long job as a banker to pursue a full-time crypto profession as her preliminary investments from early 2020 confirmed the “unprecedented opportunities offered by crypto.”

My greatest flex this yr was strolling away from my banking profession of 16yrs to enter crypto full time!

Retired my dad and mom and now my aim is to retire my siblings and get them working for themselves!

NFTs and DeFi are breaking down generational curses of poverty.

— Cryptomom (@MsCryptomom1) October 9, 2021

Acknowledging the large studying curve into crypto, Gentry gives academic content material by her web site:

“I’m also hosting seminars to educate the general public about navigating in this space and things to look out for when searching for good NFT projects or DeFi tokens, and also how to quickly detect scams or rug pulls.”