US Treasury report outlines potential financial risks of NFTs

The United States Treasury Department has released its first-ever finance risk assessment for nonfungible tokens in an attempt to provide regulators with greater insight into potential risks and security concerns facing the rapidly evolving market.

Several potential risks were identified including the potential for terrorists to finance operations through NFTs, state actors using NFTs to fund nuclear proliferation, money laundering, and the potential risks to investors who may experience theft,The report repeatedly reiterated that the vast majority of these illicit activities occur through fiat financing and transactions, and are not unique to the digital asset space.

"This risk assessment recognizes that most money laundering, terrorist financing, and proliferation financing by volume and value of transactions occurs in fiat currency or otherwise outside the digital asset ecosystem via more traditional methods," the report stressed.

Despite this, the Treasury's assessment pointed to a high potential for abuse and illicit activity via NFTs, though the assessment also admitted that scant examples, if any, exist of NFTs used in terrorist financing, nuclear proliferation, or drug trafficking.Perhaps the most significant example of malicious activity cited in the report was the theft of digital assets by thelooking to sidestep U.S. sanctions and raise revenue for military spending.

The report concluded with several recommendations to mitigate potential abuse through NFTs, including regulating the NFT market, working with industry insiders to prevent fraud, collaborating with foreign partners to prevent illicit geopolitical activity, and educating consumers on the potential risks surrounding nonfungible tokens and digital assets.5 things Ethereum ETFs could mean for altcoins

Finance Finance Latest News, Finance Finance Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

U.S. Treasury Says It Wants to Better Money Laundering Regulations Around Crypto, Other Illicit FinanceNikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.
Source: CoinDesk - 🏆 291. / 63 Read more »

US Treasury says NFTs are prone to fraud and scams, recommends rules and guidance to provide clarityNFTs are prone to fraud and scams, the U.S. Treasury Department said in its first risk assessment analyzing illicit finance and NFTs.
Source: TheBlock__ - 🏆 464. / 53 Read more »