US Treasury discuss the use of NFT for money laundering

TL; DR Breakdown

• US Treasury wary of the use of NFT for laundering
• The agency released its findings in a document
• The US Treasury breakdown

The Non-fungible token sector has continued to rack in tons of money due to its popularity. Due to its peculiarity, several people have vied to enter the scene and make money. Ranging from individuals to celebrities and companies, there is no limit to the industry participants. However, going by a recent US Treasury report is looking into the potential of digital art in carrying out money laundering activities.

The US agency releases its findings

According to a study submitted by the US Treasury, it stressed that the modus operandi of using physical art to launder money could be extended to the digital art scene. It noted that the sector has its risks just like every other sector in the crypto industry. However, the US Treasury concedes that all this is based on the particular perspective and the type of activities that traders are carrying out.

The study talks about how NFTs were necessary and used to show full ownership of physical and virtual property. The US Treasury noted that even though smart contracts control the art pieces, both of the market participants are the ones who determine the price of an art piece.

US Treasury makes its case

In a recent update by Authorities in the United States, the NFT market grew as high as 2,627 in the last four quarters while seeing a jump of $1.5 billion in generated values. In their argument, the US Treasury pointed out that the market was worth about $20 billion throughout 2020. This forms their basis for assuming that money could be laundered through these digital art pieces. For example, an illicit actor uses dirty money to buy art, sells it to a new person, and gets clean money for the piece.

One factor that puts NFTs at an advantage is the peer-to-peer transactions in the sector. With this, transactions are done quickly, which doesn’t eventually make its way into the distributed ledger at the end of the sale. In their conclusion, the US Treasury mentioned that art houses might not know how to use blockchain to verify and recognize their users effectively.