Money laundering via NFTs (Non-Fungible Tokens) is also on the rise, according to a new report, after cryptocurrencies have been heavily abused for money laundering transactions.
A report by blockchain data platform Chainalysis on Wednesday found that while only a small fraction of activity in the NFT market can currently be attributed to money laundering, their share is growing.
While it is difficult to quantify money laundering in the physical art market, thanks to the inherent transparency of blockchain, we can make more reliable estimates of money laundering based on NFT transactions, the report said.
According to the report, cryptocurrencies sent to NFT markets via illicit addresses jumped sharply in the third quarter of 2021, surpassing $1 million, and grew further in the fourth quarter, reaching nearly $1.4 million.
In both quarters, the vast majority of such activity came from scam-related addresses sending funds to the NFT marketplace for purchases, the report said.
NFTs offer the potential for abuse. It’s important for our industry to consider how this new asset class can change the way we connect blockchain to the real world, the report said.