{"id":49389,"date":"2021-09-14T09:55:43","date_gmt":"2021-09-14T06:55:43","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=49389"},"modified":"2025-09-02T12:25:46","modified_gmt":"2025-09-02T09:25:46","slug":"the-digital-laundromat-how-nfts-are-intensifying-the-money-laundering-problem","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/the-digital-laundromat-how-nfts-are-intensifying-the-money-laundering-problem\/","title":{"rendered":"The Digital Laundromat: How NFTs Are Intensifying the Money-Laundering Problem"},"content":{"rendered":"<p>In 2021, non-fungible tokens (NFTs) became one of the hottest topics in the cryptocurrency industry. Global outlets <a href=\"https:\/\/twitter.com\/WSJ\/status\/1370253256920858625?s=20\">dedicate<\/a> front pages to these assets, <a href=\"https:\/\/twitter.com\/opensea\/status\/1433080990440775694?s=20\">invest<\/a> by celebrities and even schoolchildren <a href=\"https:\/\/u1f987.com\/en\/news\/british-schoolboy-earns-about-350000-from-nft-pixel-whales\">earn<\/a> hundreds of thousands of dollars from selling them.<\/p>\n<p>In March, Beeple\u2019s NFT, the pseudonym of Mike Winkelmann, <a href=\"https:\/\/u1f987.com\/en\/news\/beeples-nft-sells-at-christies-for-69-3-million\">saw its NFT go under the hammer at Christie\u2019s<\/a> for $69.3 million. He instantly joined the ranks of the highest-paid living artists.<\/p>\n<blockquote class=\"instagram-media\" data-instgrm-permalink=\"https:\/\/www.instagram.com\/tv\/CMSkMgAHELx\/?utm_source=ig_embed&#038;utm_campaign=loading\" data-instgrm-version=\"13\" style=\" background:#FFF; border:0; border-radius:3px; box-shadow:0 0 1px 0 rgba(0,0,0,0.5),0 1px 10px 0 rgba(0,0,0,0.15); margin: 1px; max-width:540px; min-width:326px; padding:0; width:99.375%; width:-webkit-calc(100% - 2px); width:calc(100% - 2px);\">\n<div style=\"padding:16px;\"> <a href=\"https:\/\/www.instagram.com\/tv\/CMSkMgAHELx\/?utm_source=ig_embed&#038;utm_campaign=loading\" style=\" background:#FFFFFF; line-height:0; padding:0 0; text-align:center; text-decoration:none; width:100%;\" target=\"_blank\" rel=\"noopener\"> <\/p>\n<div style=\" display: flex; flex-direction: row; align-items: center;\">\n<div style=\"background-color: #F4F4F4; border-radius: 50%; flex-grow: 0; height: 40px; margin-right: 14px; width: 40px;\"><\/div>\n<div style=\"display: flex; flex-direction: column; flex-grow: 1; justify-content: center;\">\n<div style=\" background-color: #F4F4F4; border-radius: 4px; flex-grow: 0; height: 14px; margin-bottom: 6px; width: 100px;\"><\/div>\n<div style=\" background-color: #F4F4F4; border-radius: 4px; flex-grow: 0; height: 14px; width: 60px;\"><\/div>\n<\/div>\n<\/div>\n<div style=\"padding: 19% 0;\"><\/div>\n<div style=\"display:block; height:50px; margin:0 auto 12px; width:50px;\"><svg width=\"50px\" height=\"50px\" viewBox=\"0 0 60 60\" version=\"1.1\" xmlns=\"https:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"https:\/\/www.w3.org\/1999\/xlink\"><g stroke=\"none\" stroke-width=\"1\" fill=\"none\" fill-rule=\"evenodd\"><g transform=\"translate(-511.000000, -20.000000)\" fill=\"#000000\"><g><path d=\"M556.869,30.41 C554.814,30.41 553.148,32.076 553.148,34.131 C553.148,36.186 554.814,37.852 556.869,37.852 C558.924,37.852 560.59,36.186 560.59,34.131 C560.59,32.076 558.924,30.41 556.869,30.41 M541,60.657 C535.114,60.657 530.342,55.887 530.342,50 C530.342,44.114 535.114,39.342 541,39.342 C546.887,39.342 551.658,44.114 551.658,50 C551.658,55.887 546.887,60.657 541,60.657 M541,33.886 C532.1,33.886 524.886,41.1 524.886,50 C524.886,58.899 532.1,66.113 541,66.113 C549.9,66.113 557.115,58.899 557.115,50 C557.115,41.1 549.9,33.886 541,33.886 M565.378,62.101 C565.244,65.022 564.756,66.606 564.346,67.663 C563.803,69.06 563.154,70.057 562.106,71.106 C561.058,72.155 560.06,72.803 558.662,73.347 C557.607,73.757 556.021,74.244 553.102,74.378 C549.944,74.521 548.997,74.552 541,74.552 C533.003,74.552 532.056,74.521 528.898,74.378 C525.979,74.244 524.393,73.757 523.338,73.347 C521.94,72.803 520.942,72.155 519.894,71.106 C518.846,70.057 518.197,69.06 517.654,67.663 C517.244,66.606 516.755,65.022 516.623,62.101 C516.479,58.943 516.448,57.996 516.448,50 C516.448,42.003 516.479,41.056 516.623,37.899 C516.755,34.978 517.244,33.391 517.654,32.338 C518.197,30.938 518.846,29.942 519.894,28.894 C520.942,27.846 521.94,27.196 523.338,26.654 C524.393,26.244 525.979,25.756 528.898,25.623 C532.057,25.479 533.004,25.448 541,25.448 C548.997,25.448 549.943,25.479 553.102,25.623 C556.021,25.756 557.607,26.244 558.662,26.654 C560.06,27.196 561.058,27.846 562.106,28.894 C563.154,29.942 563.803,30.938 564.346,32.338 C564.756,33.391 565.244,34.978 565.378,37.899 C565.522,41.056 565.552,42.003 565.552,50 C565.552,57.996 565.522,58.943 565.378,62.101 M570.82,37.631 C570.674,34.438 570.167,32.258 569.425,30.349 C568.659,28.377 567.633,26.702 565.965,25.035 C564.297,23.368 562.623,22.342 560.652,21.575 C558.743,20.834 556.562,20.326 553.369,20.18 C550.169,20.033 549.148,20 541,20 C532.853,20 531.831,20.033 528.631,20.18 C525.438,20.326 523.257,20.834 521.349,21.575 C519.376,22.342 517.703,23.368 516.035,25.035 C514.368,26.702 513.342,28.377 512.574,30.349 C511.834,32.258 511.326,34.438 511.181,37.631 C511.035,40.831 511,41.851 511,50 C511,58.147 511.035,59.17 511.181,62.369 C511.326,65.562 511.834,67.743 512.574,69.651 C513.342,71.625 514.368,73.296 516.035,74.965 C517.703,76.634 519.376,77.658 521.349,78.425 C523.257,79.167 525.438,79.673 528.631,79.82 C531.831,79.965 532.853,80.001 541,80.001 C549.148,80.001 550.169,79.965 553.369,79.82 C556.562,79.673 558.743,79.167 560.652,78.425 C562.623,77.658 564.297,76.634 565.965,74.965 C567.633,73.296 568.659,71.625 569.425,69.651 C570.167,67.743 570.674,65.562 570.82,62.369 C570.966,59.17 571,58.147 571,50 C571,41.851 570.966,40.831 570.82,37.631\"><\/path><\/g><\/g><\/g><\/svg><\/div>\n<div style=\"padding-top: 8px;\">\n<div style=\" color:#3897f0; font-family:Arial,sans-serif; font-size:14px; font-style:normal; font-weight:550; line-height:18px;\"> View this post on Instagram<\/div>\n<\/div>\n<div style=\"padding: 12.5% 0;\"><\/div>\n<div style=\"display: flex; flex-direction: row; margin-bottom: 14px; align-items: center;\">\n<div>\n<div style=\"background-color: #F4F4F4; border-radius: 50%; height: 12.5px; width: 12.5px; transform: translateX(0px) translateY(7px);\"><\/div>\n<div style=\"background-color: #F4F4F4; height: 12.5px; transform: rotate(-45deg) translateX(3px) translateY(1px); width: 12.5px; flex-grow: 0; margin-right: 14px; margin-left: 2px;\"><\/div>\n<div style=\"background-color: #F4F4F4; border-radius: 50%; height: 12.5px; width: 12.5px; transform: translateX(9px) translateY(-18px);\"><\/div>\n<\/div>\n<div style=\"margin-left: 8px;\">\n<div style=\" background-color: #F4F4F4; border-radius: 50%; flex-grow: 0; height: 20px; width: 20px;\"><\/div>\n<div style=\" width: 0; height: 0; border-top: 2px solid transparent; border-left: 6px solid #f4f4f4; border-bottom: 2px solid transparent; transform: translateX(16px) translateY(-4px) rotate(30deg)\"><\/div>\n<\/div>\n<div style=\"margin-left: auto;\">\n<div style=\" width: 0px; border-top: 8px solid #F4F4F4; border-right: 8px solid transparent; transform: translateY(16px);\"><\/div>\n<div style=\" background-color: #F4F4F4; flex-grow: 0; height: 12px; width: 16px; transform: translateY(-4px);\"><\/div>\n<div style=\" width: 0; height: 0; border-top: 8px solid #F4F4F4; border-left: 8px solid transparent; transform: translateY(-4px) translateX(8px);\"><\/div>\n<\/div>\n<\/div>\n<div style=\"display: flex; flex-direction: column; flex-grow: 1; justify-content: center; margin-bottom: 24px;\">\n<div style=\" background-color: #F4F4F4; border-radius: 4px; flex-grow: 0; height: 14px; margin-bottom: 6px; width: 224px;\"><\/div>\n<div style=\" background-color: #F4F4F4; border-radius: 4px; flex-grow: 0; height: 14px; width: 144px;\"><\/div>\n<\/div>\n<p><\/a><\/p>\n<p style=\" color:#c9c8cd; font-family:Arial,sans-serif; font-size:14px; line-height:17px; margin-bottom:0; margin-top:8px; overflow:hidden; padding:8px 0 7px; text-align:center; text-overflow:ellipsis; white-space:nowrap;\"><a href=\"https:\/\/www.instagram.com\/tv\/CMSkMgAHELx\/?utm_source=ig_embed&#038;utm_campaign=loading\" style=\" color:#c9c8cd; font-family:Arial,sans-serif; font-size:14px; font-style:normal; font-weight:normal; line-height:17px; text-decoration:none;\" target=\"_blank\" rel=\"noopener\">Post by Christie\u2019s (@christiesinc)<\/a><\/p>\n<\/div>\n<\/blockquote>\n<p> <script async src=\"\/\/www.instagram.com\/embed.js\"><\/script><\/p>\n<p>NFTs are turning works by Banksy, Pablo Picasso and Andy Warhol into tokenised artworks, and the State Hermitage is selling tokenised pieces from its own collection.<\/p>\n<p>Traditional artists have split into two camps: some, like Damien Hirst, see NFTs as a new, promising direction, while others, such as David Hockney, call the segment \u201chome to swindlers and fraudsters.\u201d<\/p>\n<p>Supporters of Hockney have good reason to believe the technology could aggravate the industry\u2019s existing problems, long described as the \u201cperfect venue for money laundering.\u201d <a href=\"https:\/\/www.imf.org\/external\/pubs\/ft\/fandd\/2019\/09\/the-art-of-money-laundering-and-washing-illicit-cash-mashberg.htm\">as noted<\/a>.<\/p>\n<div class=\"wp-block-text-wrappers-keypoints article_keypoints\">\n<ul class=\"wp-block-list\">\n<li>Huge turnover and the traditional way of doing business in the art market make it attractive to criminals seeking to launder illicit gains.<\/li>\n<li>Regulation in this space is tightening, so launders look for new tools to move their schemes. NFTs could be one such instrument.<\/li>\n<li>The NFT segment remains the \u201cWild West\u201d \u2014 a grey area where money can be cleaned with ease. It is destined for regulation, and authorities have already taken notice.<\/li>\n<\/ul>\n<\/div>\n<h2 class=\"wp-block-heading\">Money-Laundering Through Art<\/h2>\n<p>Launderers have targeted the art industry for two main reasons. First, the legitimate art market itself is enormous: in 2019 the International Monetary Fund <a href=\"https:\/\/www.imf.org\/external\/pubs\/ft\/fandd\/2019\/09\/the-art-of-money-laundering-and-washing-illicit-cash-mashberg.htm#:~:text=The%20legitimate%20art%20market%20is,much%20as%20%246%20billion%20annually.\">estimated<\/a> it at $68 billion. The pandemic reduced it by about 27% to $50.1 billion.<\/p>\n<p>Second, the traditional art-trading industry\u2019s environment has long supported money-laundering practices. In recent years the market has become more transparent, yet catalogues of auction houses can still list objects as coming \u201cfrom a private collection\u201d without further detail.<\/p>\n<p>According to <a href=\"https:\/\/home.treasury.gov\/system\/files\/126\/ofac_art_advisory_10302020.pdf\">U.S. Treasury<\/a>, sometimes paintings travel to exhibitions via the owners\u2019 representatives, and the owners themselves remain unknown even to galleries arranging the sale.<\/p>\n<p>Buyers also frequently use intermediaries to preserve anonymity. For example, when Saudi Crown Prince Mohammed bin Salman purchased Leonardo da Vinci\u2019s Salvator Mundi from Russian billionaire Dmitry Rybolovlev, the deal was conducted in the name of his friend.<\/p>\n<p>Particular attention is paid to so-called \u201cfree ports,\u201d which formally serve as warehouses for goods in transit. In practice they <a href=\"https:\/\/www.europarl.europa.eu\/cmsdata\/155722\/5%20-%2002%20EPRS_Freeports%20in%20the%20EU_exec.sum.pdf\">have become<\/a> special zones where tax regimes of a country do not apply, enabling avoidance of duties on art sales.<\/p>\n<p>The industry remains effectively unregulated; the value of paintings and other works lacks objective valuation, and participants in deals can remain anonymous. All this makes the market a convenient laundering ground for dirty money.<\/p>\n<p>A telling example concerns Jean-Michel Basquiat\u2019s Hannibal. Brazilian banker Edemar Cid Ferreira <a href=\"https:\/\/www.natlawreview.com\/article\/art-and-money-laundering\">sent<\/a> the painting to the United States declaring a value of $100.<\/p>\n<p>Customs cleared the cargo without issue, but, according to the U.S. Department of Justice, the actual value was $8 million. When the painting was eventually confiscated, it sold at Sotheby\u2019s for $13.1 million.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">7 October, Sotheby&#8217;s London, J.M.Basquiat, &#8220;Hannibal&#8221;, Est.3.500.000-4.000.000 GBP, Sold 10.565.000 GBP \/11.693,297 \u20ac <a href=\"https:\/\/t.co\/4GPjxMPxyr\">pic.twitter.com\/4GPjxMPxyr<\/a><\/p>\n<p>\u2014 enricogatti (@areaconsulting) <a href=\"https:\/\/twitter.com\/areaconsulting\/status\/784530449943101440?ref_src=twsrc%5Etfw\">October 7, 2016<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Works of art are used to conceal criminal proceeds not only by banks tied to financial schemes, but also by other scammers, including unscrupulous market participants.<\/p>\n<p>At the end of 2017, Beaufort Securities \u2014 a Mauritius-based investment company later charged with defrauding clients and manipulating shares \u2014 <a href=\"https:\/\/news.artnet.com\/art-world\/matthew-green-charged-money-laundering-us-1236929\">proposed<\/a> to a London gallery owner, Matthew Green, a profit from reselling Picasso\u2019s Les Personnages.<\/p>\n<p>Green agreed to take \u00a36.7 million (~$9 million at the time) in exchange for the artist\u2019s work, knowing the funds came from a securities-fraud scheme. It was planned that the gallery owner would issue fake paperwork recording the sale, while the painting would be hidden, with the parties then simulating a reverse deal at a lower price.<\/p>\n<p>UNESCO data show that in 2018 the underground market for trading art reached $6\u20138 billion. Given the near-total lack of information about shadow deals, the real figures may be significantly higher.<\/p>\n<p>Regulators are naturally unhappy with this state of affairs.<\/p>\n<p>By January 2020, EU member states were required to implement the Fifth Anti-Money Laundering Directive into their national laws. Under the new rules galleries, auction houses and art dealers must collect, store and share information on clients, their sources of funds and their transactions with state authorities.<\/p>\n<p>In January 2021, the U.S. Congress <a href=\"https:\/\/www.fincen.gov\/sites\/default\/files\/2021-03\/FinCEN%20Notice%20on%20Antiquities%20and%20Art_508C.pdf\">extended<\/a> federal AML requirements, originally developed for banks, to antique dealers. The Treasury and other agencies are instructed to determine which markets should come under regulation and to what extent such oversight should concentrate on trading expensive artworks.\u00a0<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u201cSecrecy, anonymity and lack of regulation create a conducive environment for money laundering and sanctions evasion,\u201d \u2014 <a href=\"https:\/\/www.hsgac.senate.gov\/imo\/media\/doc\/2020-07-29%20PSI%20Staff%20Report%20-%20The%20Art%20Industry%20and%20U.S.%20Policies%20that%20Undermine%20Sanctions.pdf\">says<\/a> in a Senate committee staff report published the previous year in support of tighter oversight of authorship<\/p>\n<\/blockquote>\n<p>Regulatory regimes are evolving in line with global trends. Post-Soviet states are no exception.<\/p>\n<p>In Russia, for example, the law does not obligate art businesses to report for AML purposes. Yet several regulations and Supreme Court rulings have long defined activities related to the sale of artworks as high-risk for laundering.<\/p>\n<p>Regulation of the physical-art trade is tightening now, and over time dealers are likely to be driven toward non-anonymous deals. Yet blockchain technology has introduced NFT markets that do not fit traditional oversight.<\/p>\n<h2 class=\"wp-block-heading\"><strong>New Threat<\/strong><\/h2>\n<p>One Hacker News user <a href=\"https:\/\/news.ycombinator.com\/item?id=26289141\">called<\/a> NFT \u201cthe best way to launder money in the crypto world.\u201d With tokens, there are no storage issues; most NFT-focused platforms operate with minimal KYC or even without it.<\/p>\n<p>This view is popular among community members. After all, what could be simpler than \u201cin five minutes to create <a href=\"https:\/\/u1f987.com\/en\/news\/unknown-buyer-paid-135000-for-an-etherrock-nft\">a JPEG image of a rock<\/a>, and then sell it for $135,000\u201d (perhaps to oneself)?<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">NFT\u2019s primary use case is money laundering. <\/p>\n<p>Think about it. If you needed to wash some money wouldn\u2019t creating a jpeg of a rock in 5 minutes than \u201cselling\u201d it for $135,000 make sense? <\/p>\n<p>Hunter Biden is doing the same with his \u201cArt\u201d <\/p>\n<p>When NFT\u2019s Hunter?<\/p>\n<p>\u2014 BITCOIN MAXIMALIST \ud83c\uddf8\ud83c\uddfb (@maxkeiser) <a href=\"https:\/\/twitter.com\/maxkeiser\/status\/1424558171918581762?ref_src=twsrc%5Etfw\">August 9, 2021<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Potential money-laundering actors could indeed turn their attention to NFT marketplaces. The largest among them \u2014 OpenSea \u2014 identifies customers by Ethereum wallet and allows <a href=\"https:\/\/medium.com\/@TeaSea1\/how-to-list-a-private-sale-on-opensea-97bd334b7c4\">private sales<\/a> of digital assets. The latter are auctions accessible only to pre-specified addresses.<\/p>\n<p>Tim Suen (sic) Swanson, founder of Post Oak Labs and former director of market research at the blockchain consortium R3, believes NFTs are already used not only to launder illicit funds but also to avoid taxes.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">tldr mechanics of money laundering with NFT art:<\/p>\n<p>Known account with large tax liability buys it from unknown account. Known account resells to 3rd account for significantly lower price realizing a loss that offsets previous tax liabilities.<\/p>\n<p>rinse and repeat with oneself too. <a href=\"https:\/\/t.co\/BYA59slyaV\">https:\/\/t.co\/BYA59slyaV<\/a><\/p>\n<p>\u2014 Tim Swanson (@ofnumbers) <a href=\"https:\/\/twitter.com\/ofnumbers\/status\/1369841023766118401?ref_src=twsrc%5Etfw\">March 11, 2021<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abThe mechanism for laundering money with NFT: a known account with large tax liabilities buys the token from an unknown account, then resells it to a third account at a much lower price, generating a loss that offsets the aforementioned tax liabilities. This repeats again and again\u00bb, \u2014 wrote him.<\/p>\n<\/blockquote>\n<p>Crypto researcher Mr. Whale argues that the NFT segment\u2019s rapid rise owes much to money-laundering-related activity.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abBehind the facades of bored rich people buying digital artworks at ridiculous prices lies a sinister, sophisticated money-laundering scheme by the ultra-rich crypto elite, aimed at legitimising illicit income\u00bb, \u2014 he wrote in his blog.<\/p>\n<\/blockquote>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">This NFT just sold for\u2026 <\/p>\n<p>$130 million dollars. <\/p>\n<p>Money laundering well done! \ud83d\udc4f <a href=\"https:\/\/t.co\/e2IkdKQT2h\">pic.twitter.com\/e2IkdKQT2h<\/a><\/p>\n<p>\u2014 Mr. Whale (@CryptoWhale) <a href=\"https:\/\/twitter.com\/CryptoWhale\/status\/1425388750071271427?ref_src=twsrc%5Etfw\">August 11, 2021<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>Bloomberg Law\u2019s money-laundering expert Matthew Long of Quantexa notes NFT\u2019s appeal to launderers: digital artworks have highly flexible valuations, which benefits criminals.<\/p>\n<h2 class=\"wp-block-heading\"><strong>Wild West<\/strong><\/h2>\n<p>GMT Legal managing partner Andrey Tugin (The Russian name is preserved) told ForkLog that NFT markets lack AML regulation \u2014 the segment remains a grey area where it is easy to \u201cclean\u201d funds. He expects a surge in laundering deals with NFTs, especially as regulation of the tangible art market tightens.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abSuch deals are easy to execute due to the technical nature of NFT. [\u2026] There are no universal criteria to value them. The same is seen in the tangible art market, which makes it popular for laundering. Yet there are some rough criteria for fair value of a painting (age, condition, the artist\u2019s name, etc.). In the NFT market, these criteria don\u2019t exist\u00bb, \u2014 he explained.<\/p>\n<\/blockquote>\n<p>New York law firm Kobre &#038; Kim\u2019s lawyers <a href=\"https:\/\/forkast.news\/how-nfts-could-trigger-lawsuits-and-anti-money-laundering-regulation\/\">believe<\/a> the lack of regulation is one of the main problems with the new market. They note that US regulators have begun to focus on this segment and are likely to bring it into the legal framework. In particular, NFT marketplace operators could be treated as art dealers.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abUS anti-money-laundering laws were recently expanded and in some cases may apply to antique-dealer and art-market actors. A key question that remains is whether these laws will extend to NFTs that represent rights to antiques and art objects\u00bb, \u2014 said at Kobre &#038; Kim.<\/p>\n<\/blockquote>\n<p>They emphasise that if NFTs are recognised as securities, platform operators would also have to comply with AML\/KYC requirements, as implemented by local Bitcoin exchanges.\u00a0<\/p>\n<p>There is also a third option \u2014 some NFTs, at least certain types, could be deemed securities. Earlier, this <span data-descr=\"The Securities and Exchange Commission\" class=\"old_tooltip\">SEC<\/span> chairwoman {AOPEN_8}\u00ab \u0437\u0430\u044f\u0432\u0438\u043b\u0430 <\/a> that they could be regulated by the Commission. In that case the market would fall under direct SEC oversight.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abThe NFT concept presumes tokens are non-fungible. For that reason, they are hard to classify as securities. But the situation is less clear for those creating fractional NFT indices. This also concerns those selling index baskets of non-fungible tokens\u00bb, \u2014 said Pears.<\/p>\n<\/blockquote>\n<p>According to Tugarin, virtually all post-Soviet states have NFTs outside the regulatory framework. Ukraine, however, on September 8 <span data-descr=\"\u043f\u0440\u0438\u043d\u044f\u043b\u0430\" class=\"old_tooltip\">took a step and passed<\/span> the &#8220;On Virtual Assets&#8221; law.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>\u00abThe definition of virtual asset proposed in this law is broad enough to cover NFT, though the document does not directly mention the non-fungible token. Therefore market participants engaging in NFT operations must comply with the law on the Prevention of and Fight against Money Laundering, Financing of Terrorism and Financing of the Proliferation of Weapons of Mass Destruction\u00bb, \u2014 explained Tugarin.<\/p>\n<\/blockquote>\n<p>The expert noted that in the future these countries are likely to regulate the NFT market for AML purposes. In his view, they may follow Ukraine\u2019s path or introduce their own requirements obliging dealers to perform KYC procedures.\u00a0<\/p>\n<h2 class=\"wp-block-heading\"><strong>Predestined for Regulation<\/strong><\/h2>\n<p>Former USA Today journalist Isaiah Mockoll (sic) argues that NFTs are \u201cdestined for regulation.\u201d If one looks at how state authorities have steadily brought order to the crypto industry, none of its segments have managed to avoid regulation \u2014 from ICOs to <span data-descr=\"Initial Coin Offering\" class=\"old_tooltip\">DeFi<\/span> and stablecoins.<\/p>\n<p>A similar fate awaits non-fungible tokens, which will make money-laundering with their help more difficult. Some regulators have already signalled interest in NFTs and intergovernmental bodies like the <span data-descr=\"Financial Action Task Force\" class=\"old_tooltip\">FATF<\/span>.<\/p>\n<p>Highly liquid assets, including art, collectibles and even precious stones, are often used for criminal ends.\u00a0<\/p>\n<p>Cryptocurrencies are linked to legitimising illicit funds, yet they have become a multi-billion industry. Some argue the NFT situation is somewhat exaggerated.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p lang=\"en\" dir=\"ltr\">can we just agree that jpg NFTs being worth a bunch of money is inherently absurd just like photos on tiny pieces of cardboard, stamps, coins, action figures, and other limited collectibles being worth a bunch of money is inherently absurd <\/p>\n<p>and then, y\u2019know, get over it<\/p>\n<p>\u2014 Shibetoshi Nakamoto (@BillyM2k) <a href=\"https:\/\/twitter.com\/BillyM2k\/status\/1435772913332883461?ref_src=twsrc%5Etfw\">September 9, 2021<\/a><\/p><\/blockquote>\n<p> <script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>That NFTs, like other digital assets, are issued on a blockchain \u2014 meaning their transaction history can be traced \u2014 also argues against money-laundering. The seller and buyer can be identified in the \u201cchoke point\u201d of converting crypto to fiat.<\/p>\n<p>Read ForkLog\u2019s Bitcoin news in our Telegram \u2014 news on cryptocurrencies, prices, and analysis.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In 2021, NFTs became one of the hottest topics in the crypto industry. Some say the technology could worsen problems in the art market, long described as the \u201cperfect venue for money laundering.\u201d ForkLog investigates whether these concerns are justified.<\/p>\n","protected":false},"author":1,"featured_media":49390,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[1154,1213],"class_list":["post-49389","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-crimes","tag-nft"],"aioseo_notices":[],"amp_enabled":true,"views":"24","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/49389","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=49389"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/49389\/revisions"}],"predecessor-version":[{"id":49391,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/49389\/revisions\/49391"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/49390"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=49389"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=49389"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=49389"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}