US Treasury describes NFTs as ‘highly susceptible to use in fraud and scams’

• The risk assessment is Treasury’s first on NFTs as a means of committing fraud and other crimes.

• The Treasury determined that NFT platforms “lack appropriate controls” to combat money laundering and sanctions evasion.

The US Treasury Department said non-fungible tokens (NFTs) are “highly susceptible to use in fraud and scams and are subject to theft,” in a new risk assessment on illicit finance, the first on NFTs as a means of committing fraud and other crimes.

“The report determines that illicit actors can use NFTs to launder proceeds from underlying crimes, often in combination with other methods to obfuscate the illicit source of the proceeds of crime,” Treasury said Wednesday.

Treasury also determined that NFT platforms “lack appropriate controls” to combat money laundering and sanctions evasion. Therefore, it recommends greater application of regulations to NFTs and the platforms on which they are traded.

A US government study on NFTs in March concluded that no specific legislation was required to address concerns relating to copyright and trademark infringement. The Treasury assessment, however, addresses the financial aspect of the NFT market more directly.

See more information: NFT providers may need registration to comply with UK money laundering rules

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