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Highlights
- The year 2021 has seen the mainstreaming of non-fungible tokens (NFTs).
- The anonymity capabilities that blockchain provides, coupled with the nature of NFTs make it possible to be used for money laundering.
- NFTs can also be traded for digital currencies which further complicates the situation.
It would not be very surprising should the fourth season of the Netflix show ‘Ozark’ feature NFTs. The year 2021 has seen the mainstreaming of non-fungible tokens (NFTs).
Amid the craze, the potential for NFTs to be used as money laundering has also come to light. Should you wish to learn more about what NFTs are and how they work, you can look at this article.
There is little doubt NFTs are a boon to artists, digital and traditional, with regards to proving and preserving originality of a work. And, the various functions like ownership rights all make for very useful technology. But that said, the potential for NFTs to be used by money launderers is very real.
The anonymity capabilities that blockchain provides coupled with the nature of NFTs make it possible to potentially be used for money laundering. NFTs can vary a lot in price. You may have some very costly ones and some pretty cheap ones.
Also read: What are "Pepsi Mic Drop" NFTs?
What determines the price of an NFT, essentially, is how much a buyer is willing to shell out for it. This means money launderers can create an NFT that may not be able to get a big price and buy it themselves with “dirty” money in order to clean it.
Furthermore, NFTs can also be traded for digital currencies which further complicates the situation. Some experts have also illustrated the potential for NFTs to be used for tax evasion.
Also read: What prompted Melania Trump to unveil her NFT platform
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Also read: Why are NFTs so popular with people?
Bottom line:
NFTs and blockchain technology may hold a lot of value for artists, but there’s no denying the challenges the space faces with regard to fraud and money laundering. Money laundering allows for terrorism, drugs, illegal arms and human trafficking among its many malicious uses.
The big question is if and when a solution comes. Some have spoken of the possibility of regulating auction houses much like the point of exchange regulation cryptos have.
Also read: Bitcoin hedge failing against inflation; New Bitcoin NFT released
