US Treasury warns of high risks of fraud and fraud in the NFT market

US Treasury warns of high risks of fraud and fraud in the NFT market

O US Treasury Department identified NFTs as “highly susceptible to fraud and fraud” in its most recent risk assessment on illicit financing.

Released on May 29, the report outlines how NFTs can be used by criminals to launder money from illegal activities, highlighting the potential of NFTs to facilitate money laundering due to their unique and high-value nature.

This report marks the Treasury’s first detailed examination of NFTs in the context of financial crime.

US Treasury recommends stricter regulations

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

Treasury also noted that many NFT Platforms does not have adequate controls to prevent money laundering and sanctions evasion and recommends that stricter regulations be applied to NFTs and the platforms that trade them to mitigate these risks.

This assessment contrasts with a March US government study, which concluded that no new legislation was needed to address copyright and trademark issues in the NFT space. The Treasury’s current assessment, however, focuses on financial vulnerabilities.

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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to thoroughly research any product before making any type of investment.

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