The US Congress, while considering the anti money laundering act of 2020, mandated a study of the NFTs market. The study aimed to examine the potential for the presence of illicit finance in the market for high-value art.
The study was also tasked with examining individuals and institutions who were participating in the high-value art market. Also examined were the various sectors of the market. The study examined if these participants were subverting the US financial system by indulging in money laundering or terrorist financing. The findings of this study were released recently by the US government’s Department of Treasury.
Growth of NFTs
The global market for NFTs is growing rapidly. The market for digital art poses previously unforeseen risks. This rapid growth, expectedly, has also attracted the interest of scamsters. The nature and extent of risk depend on the market structure and the incentives on offer.
Several scam schemes are now offering big profits on cryptocurrencies and NFTs. All of this has raised the concerns of the regulatory authorities.
The study also suggested various options to mitigate the potential risks. Some of the measures suggested include additional specialized training for the personnel of the law ad enforcement departments. The study also envisaged greater private sector participation in the sharing of information. Also, it was suggested that market participants be brought under the provisions of anti-money laundering and terrorism financing.
The growth of the NFT market can be gauged by the fact that it was worth $24.9 billion in 2021. In comparison, in 2020, it was only worth $94.9 million. Industry estimates project that the market could grow to $35 billion in 2022 and further to $80 billion in 2025.