NFTs are one of the most popular applications of cryptocurrencies right now. But according to the US Treasury, NFTs may present the authorities with Illicit Finance Risks. It is estimated that the market of NFTs will reach $35B by the end of 2022 and $80B by 2025. So, even a small fraction of the same used for wrong activities could be a huge number.
The risk with NFTs
One of the main concerns that arise with NFTs is money laundering. It is pretty easy to do, and you can find hundreds of articles on the internet for the same. In the recent study of the Illicit finance use of NFTs, the US Treasury said that the market participants and high-value markets pose the risk of terrorism financing as well.
You can even find examples of money laundering scenarios if you check the most expensive NFT arts sold online. One was a single pixel selling for millions of dollars. Now, the buyer of the NFT was anonymous, and no one in their right mindset will pay so much for that NFT. So, it seems that in this case as well, it was a case of money laundering. While it cannot be asserted with 100% surety but seems likely. This kind of case can happen in the future, and it gets worse when the same is not for tax evasion but terrorism funding.
Steps by the authorities
/GettyImages-157394940-7cffe51373fd43e2849e685d0c3fe713.jpg)
Now we know what the risks are posed by NFTs, and the study done by the government also recommends some steps of precaution. These are updating the training for law and customs enforcement, applying anti-money laundering and terrorism financing schemes, and bringing more information sharing from the private sector. All this will also help in reducing the number of scams in this space.
Another great thing by the authorities would be to create awareness about NFTs and make sure investors understand them. This way, there would be fewer chances of them getting scammed by anyone, and money wouldn’t flow into the wrong hands.
What are your thoughts as the US Treasury says that NFTs may present Illicit Finance Risks? And do you think the steps taken by the authorities will be enough to stop them? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: 7-year bull trendline of Bitcoin pushes it above $40k
