A recent report, published by the US Treasury Department on February 4, reveals brief yet alarming information on the illicit activities in the art market, related to the NFTs.
Namely, the report finds that it is hard to monitor the artwork market because purchases are rarely electronically recorded. However, in the context of NFTs, the situation is even more complicated. If a criminal wants to, it is possible to fictively sell NFT artwork to oneself, usually at an unreasonably high price, thus engaging in the so-called “self-laundering” act.
Additionally, the owners of NFTs are anonymous, and in turn, can’t be prosecuted by the court in case of infringement.
Since the trade volume of the art market significantly dropped during the pandemics, a lot of money invested in art in the past two years went into the NFT market. This situation, combined with the lack of proper legislation, paved the way for cases of illegal activities.