![](https://media.cryptoglobe.com/2022/03/andrey-metelev-yscrM1AOEKI-unsplash-768x512.jpg)
The U.S. Department of Treasury has released a 29-page report titled “Illicit Finance Risk Assessment of Non-Fungible Tokens,” highlighting potential risks associated with NFTs. The assessment reveals that while NFTs and their platforms are seldom used for activities such as proliferation financing, they are highly susceptible to fraud and scams. Traditional fraudulent schemes involving NFTs can result in stolen assets, and criminals often use NFTs to launder proceeds from crimes, employing techniques to obscure the illicit source of funds.
The report details how criminals exploit various vulnerabilities related to the unique characteristics of NFTs, the assets they represent, and existing regulatory frameworks both in the U.S. and internationally. Specific concerns include cybersecurity vulnerabilities, challenges with trademark and copyright protection, and the fluctuating hype and pricing of NFTs, which can facilitate fraud and theft. It also claims that the lack of appropriate controls in some NFT firms and platforms can jeopardize market integrity, facilitate money laundering and terrorist financing, and aid in sanctions evasion.
To mitigate these risks, the Treasury report examined several measures that can partially address the identified threats and vulnerabilities. These measures include industry tools, law enforcement actions and public announcements, the transparency of most blockchains, and existing regulations and requirements for industry participants. While these can help mitigate illicit finance risks, they are not comprehensive solutions.
The Treasury has outlined several areas for further work to address outstanding risks associated with NFTs:
Featured Image via Unsplash
U.S. Treasury Finds NFTs Prone to Fraud and Scams
/latest/2024/05/u-s-department-of-treasury-identifies-illicit-finance-risks-in-nfts/
/latest/2024/05/paypal-expands-stablecoin-pyusd-to-solana-blockchain-for-enhanced-speed-and-cost-efficiency/
Disclaimer
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.