On May 29, 2024, the Treasury published a 2024 Non-fungible Token (NFT) Illicit Finance Risk Assessment. The risk assessment explores how vulnerabilities associated with NFTs and NFT platforms may be exploited by illicit actors for money laundering, terrorist financing, and proliferation financing.
According to the Treasury’s assessment, NFTs are at high risk for fraud and theft and that illicit actors can use NFTs to launder proceeds from predicate crimes, often in combination with other methods to obscure the illicit source of proceeds of crime. The assessment finds that inadequate cybersecurity protections, challenges related to copyright and trademark protections, and the hype and fluctuating pricing of NFTs can enable criminals to perpetrate fraud and theft related to NFTs and NFT platforms.
To address outstanding risks, the risk assessment recommends several U.S. government actions, including:
Raising awareness within industry of existing obligations;
Continuing to enforce existing laws and regulations related to NFTs and NFT platforms; and
Considering further application of regulations to NFTs and NFT platforms.
The Treasury’s announcement can be found here.
See the full risk assessment here.