The US Treasury Department warns NFT of new illegal financial risks

The US Treasury Department warned that the NFT could uncover new illicit financial risks in a “study of illicit funding in the high-value art market” — approved by Congress in the Anti-Money Laundering Act 2020.

According to industry estimates, the NFT market could reach $35 billion by 2022 and more than $80 billion by 2025.

“This study examined art market participants and sectors of the high-value art market that may pose money laundering and terrorist financing risks to the US financial system.

Emerging digital art markets, such as the use of NFTs, may pose new risks depending on market structure and dynamics.

To deal with the risk, the study suggests a number of options, including updating customs law and enforcement training, increasing private sector information sharing and adopting anti-money laundering requirements, financing and countering terrorist financing for certain participants at the art market.

According to Dappradar, NFT’s total revenue will reach $24.9 billion in 2021, compared to $94.9 million a year earlier. Jefferies analysts have estimated that the market for NFTs could reach $35 billion by 2022 and more than $80 billion by 2025.

The growing popularity of the NFT has attracted scammers and worried authorities (Treasury Department).

“Scams promising huge returns for crypto and NFT are flooding the internet,” warned TK Keen, US State Department Administrator for Financial Conduct, in January. “Investors looking to buy crypto and NFT should do their due diligence to ensure that they have a full understanding of these investments and their risks before participating.”

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