The US Treasury Department recently released a report on the high-value market of art, which highlights the potential of NFTs. Especially the space for them to conduct illicit money laundering schemes or finance terror operations. The report from the Treasury referred to as the “Study of the facilitation of money laundering and terror finance through the trade in works of art” does suggest that this increasing use of art as a financial or investment asset could make the high-value art trades quite vulnerable to any money laundering schemes.
The US Treasury Has A Few Concerns For NFT
The US Treasury has claimed that the emerging space of online art may definitely present quite a host of risks, which depend on the incentives and structure of certain activities in this sector of the market- which encompasses the purchases of Nonfungible tokens, digital units on an underlying blockchain that would herald the ownership of any digital mode of art. The study also underlines the importance of NFTs in representing ownership of the physical and digital property that has been managed and controlled through digital wallets and smart contracts.
The US Treasury has also pointed out that the price of nonfungible tokens is always determined by the seller and the buyer and definitely not the market. According to the authorities in the country, the first three months of 2021 saw the market of NFT generating a record $1.5 billion in trading, after which it grew by 2,627% over the previous quarter.
Interestingly, the entire market of NFT back in 2020 alone had a valuation of over $20 billion. The Department did suggest that there was a possibility where criminals would be able to purchase NFTs with illicit funds.
The US Treasury has also stated that NFT can be sold through peer-to-peer sales, which would definitely bypass the need for an intermediary.
