The U.S. Department of the Treasury released a study on the high-value art market, and it said that the nonfungible tokens (NFT) space could be used to do illegal money laundering or fund terrorist activities.
“The Treasury Department’s study looked at how art could be used as an investment or financial asset, which could make high-value art trades more susceptible to money laundering. This is because art is becoming more popular as an investment and financial asset.
“The emerging online art market may present new risks, depending on the structure and incentives of certain activity in this sector of the market (i.e., the purchase of NFTs, digital units on an underlying blockchain that can represent ownership of a digital work of art).”
The study shows that NFTs are important because they show who owns the digital and physical property that is managed and controlled by smart contracts and digital wallets.
People buy and sell NFTs, and not the market, decide how much they are worth.
“According to U.S. authorities, in the first three months of 2021, the market for NFTs generated a record $1.5 billion in trading and grew 2,627 percent over the previous quarter.”
There was still a lot of money in the NFT market. In 2020 alone, it was worth more than $20 billion.
It was suggested by the US Treasury that criminals could buy NFTs with illegal money and then sell them to a collector who didn’t know about them. “The collector would pay the criminal with clean funds not linked to a previous crime.”
NFTs can also be sold through peer-to-peer (P2P) sales, which avoids the need for an intermediary or a public ledger.
The treasury pointed out that the NFT ecosystem has a lot of money-laundering risks, but it also said:
“Moreover, traditional industry participants, such as art auction houses or galleries, may not have the technical understanding of distributed ledger technology required to practice effective customer identification and verification in this space.”
Brenda Gentry, a USAA mortgage underwriter turned crypto entrepreneur, recently talked about how the cryptocurrency ecosystem gave her a chance to fight back against the generational curses of poverty.
Gentry, better known as MsCryptoMom, left her job as a banker after a decade to become a full-time crypto entrepreneur because her investments from early 2020 showed the “unprecedented opportunities” of crypto.
My biggest flex this year was walking away from my banking career of 16yrs to go into crypto full time!
Retired my parents and now my goal is to retire my siblings and get them working for themselves!
NFTs and DeFi are breaking down generational curses of poverty.
— Cryptomom (@MsCryptomom1) October 9, 2021
Gentry knows that cryptography is a lot to learn, so she makes educational content for her website:
“I’m also hosting seminars to educate the general public about navigating in this space and things to look out for when searching for good NFT projects or DeFi tokens, and also how to quickly detect scams or rug pulls.”