The US Department of Treasury, in its first analysis of the risks associated with illicit finance and non-fungible tokens (NFTs), has expressed concerns over the potential for fraud and money laundering through NFTs, although they are rarely used to finance terrorism. The agency believes that relevant authorities should consider developing rules or guidelines for NFTs.
In its statement, the Department of Treasury points out that most money laundering and terrorist financing activities occur through fiat currencies, but it also highlights the occurrence of fraud and money laundering in the NFT space. The agency states that the NFT market is particularly susceptible to fraud and scams, citing examples of “rug pulls” and fraudulent sales that have occurred in recent years.
The Department of Treasury also addresses copyright and trademark issues related to NFTs in the report. It states that criminals may distort the actual rights conveyed by NFTs, especially in relation to the referenced assets or access rights. “Illegal actors may also violate copyright and trademark protections to promote NFTs, which could artificially inflate the price of NFTs.”
The Treasury recommends that “relevant authorities” consider developing rules or guidance for NFTs and strive to provide further clarity on existing obligations applicable to NFT platforms. The agency states:
Source: US Department of Treasury
