NFT can be used for money laundering: US Treasury Department
Non-fungible tokens (NFT) have taken the world of cryptocurrencies like a storm. The popularity of NFTs has gone completely through the roof and the sector is even getting a fair amount of attention from the mainstream media. However, according to the US Treasury Department, there is also a potential negative side to the success of NFTs.
Money laundering with NFTs
In a report published yesterday, the Ministry states that they believe NFTs offer criminals a new way to launder money. The fact that NFTs can be bought and sold in the blink of an eye all over the world is a thorn in the side for the Ministry.
“The ability to transfer some NFTs over the Internet without concern for geographic distance and the ability to cross borders almost instantaneously makes digital art susceptible to exploitation by those seeking to launder illegal proceeds of crime, as the value transfer can be accomplished without the potential financial, regulatory, or research costs of physical shipping”
These are serious words from the Ministry. While not directly pointing the finger at the NFT sector, it is clear that the Ministry believes NFTs are a simple and safe way for criminals to launder money.
It is of course undeniable that money is being laundered with the buying and selling of NFTs, but according to crypto research firm Chainalysis , the amount of money involved is small.
Chainalysis states that in the fourth quarter of 2021, about $1.4 million from suspicious wallet addresses was sent to NFT marketplaces. That amount is not even close to the total that is allegedly laundered within the crypto industry. By 2021, at least $8.6 billion in cryptocurrencies would have been used to launder illegally obtained money. That is still only about 0.1% of all crypto transactions by 2021. “Crime is becoming a smaller part of the cryptocurrency ecosystem,” said Chainalysis.
This amount is then minuscule compared to the total amount laundered with fiat currency . It can therefore be argued that the concerns of the US Treasury Department are somewhat exaggerated.