Key Takeaways
- U.S. Treasury has identified NFTs as highly susceptible to fraud.
- NFT platforms lack appropriate controls to combat money laundering.
- Treasury recommends stricter regulations for NFTs and their platforms.
The U.S. Treasury Department has identified non-fungible tokens (NFTs) as:
Highly susceptible to use in fraud and scams,
Based on a recent risk assessment on illicit finance.
This marks the Treasury’s first comprehensive evaluation of NFTs as a medium for fraudulent activities.
The report states that:
Illicit actors can use NFTs to launder proceeds from predicate crimes, often in combination with other methods to obfuscate the illicit source of proceeds of crime.
The Treasury underscores that NFT platforms lack appropriate controls to combat money laundering and sanctions evasion, highlighting a significant gap in the current regulatory framework.
In response to these findings, the Treasury recommends the implementation of stricter regulations for NFTs and the platforms on which they are traded.
This step aims to enhance the transparency and security of the NFT market, making it harder for bad actors to exploit these digital assets.
While a previous U.S. government study in March concluded that no specific legislation was needed to address copyright and trademark infringement within the NFT space, the Treasury’s assessment focuses more directly on the financial vulnerabilities and risks associated with NFTs.
