The U.S. Department of the Treasury announced Friday the release of a “study on illicit finance in the high-value art market.” Congress mandated the study in the Anti-Money Laundering Act of 2020. “This study examined art market participants and sectors of the high-value art market that may present money laundering and terrorist financing risks to the U.S. financial system,” the Treasury wrote.
NFTs may present new financial risks.
The U.S Treasury wrote, “the emerging digital art market, such as the use of non-fungible tokens (NFTs), may present new risks, depending on the structure and market incentives. In order to combat the risks, the study recommended several options, including updating training for law and customs enforcement, enhancing private sector information sharing, and applying anti-money laundering (AML) and countering terrorism financing requirements to certain participants in the art market.” According to Dappradar, NFT sales volume totaled $24.9 billion in 2021, compared to $94.9 million in the previous year. Jefferies’ analysts have estimated that the market for NFTs could reach $35 billion in 2022 and more than $80 billion by 2025.
The rising popularity of NFTs has caused concerns among regulators.
The rising popularity of these non-fungible tokens has attracted scammers and caused concerns among regulators. “Scams promising big returns on cryptocurrencies and NFTs are flooding the Internet,” T. K. Keen, administrator for the Division of Financial Regulation of the U.S. state of Oregon, warned in January. “Investors wanting to purchase cryptocurrencies and NFTs should do their homework to make sure they fully understand these investments and their risks before getting involved.”