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Treasury weighs in on NFTs and art crime

Highlights The US Treasury Department warned today that the NFT art market is prone to money laundering and other forms of fraud. It also suggested that some (but not all) NFTs could be considered virtual assets under the rules of the Financial Action Task Force. The Treasury did not immediately comment on other matters in the NFT sector, such as plagiarism and phishing. Share this article Wikipedia may not consider NFTs to be art, but the US Treasury Department apparently does, and it has observed their role in art-related crime. possible regulation of the sector. The Ministry of Finance released a press release and report on illicit financing in high-value art markets, noting in particular the emerging NFT sector and its capacity for money laundering. The Treasury Department specifically warned that NFTs can be used for self-money laundering, a practice where users spend money on an NFT they already own to create obfuscated transaction trails on the blockchain. This kind of money laundering was a statement offered when a CryptoPunk NFT was sold for more than $500 million in October 2021. The Treasury further warned that the NFT market currently has no standard and due diligence and no central body. It argued that this could “create perverse incentives” as automated and rapid NFT sales could encourage money laundering. It noted that by contrast, experts in the traditional art and auction industry do their business much more carefully, with different institutional safeguards. The Treasury further expressed concern that “the incentive to transact could potentially exceed the incentive to verify the identity of the buyer of the work.” The Treasury has not addressed the issue of pirated media-based NFTs directly, which is a growing problem, nor has it addressed phishing scams, another common problem for NFT owners. noted that NFTs have moved a significant amount of value lately. It said NFTs saw $1.5 billion in trading volume in the first quarter of 2021 — a 2.627% increase in the quarter. The government agency also noted that NFTs used for payments and investments can be defined as virtual assets.As such, companies that create NFTs or transact can be considered a Virtual Asset Service Provider (VASP) and subject to regulation under the rules of the Financial Action Task Force (FATF) It added that NFT platforms such as Dapper Labs, SuperRare, OpenSea and art can house under these rules “depending on the nature and characteristics of the NFTs offered”. that NFTs can be considered virtual assets if they are used for payments, but otherwise fall outside that definition. Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies. Share this article The information on or accessible through this website was obtained from independent sources believed to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness or accuracy of any information contained on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not provide personal investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may be out of date, or may be incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete or inaccurate information. You should never make an investment decision about an ICO, IEO or other investment based on the information on this website, and you should never interpret or otherwise rely on the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO or other investment. We do not accept compensation in any form for analyzing or reporting ICOs, IEOs, cryptocurrency, currencies, tokenized sales, securities or commodities. See full terms and conditions. Senators urge Treasury to enact crypto rules US Senators Call for Regulations In November, the Biden administration passed a bill… New Law Could Secretly Ban Treasury Crypto Transactions A new provision in the America Competes Act could give the US Treasury overarching powers to oversee financial transactions related with money laundering risks. Some experts have… Treasury Sanctions Crypto Exchange Over Ransomware Payments The US Treasury Department’s Office of Foreign Assets Control has imposed sanctions on Russia-based cryptocurrency broker Suex for allegedly helping to launder ransomware- payments. Americans are now prohibited from… How to take advantage of market volatility using linear and inverse contracts… Perpetual contracts are agreements between buyers and sellers with no specific expiration date, unlike other types of similar contracts such as options or futures. It is for the buyer and…
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