U.S. Treasury Describes NFTs as 'Highly Susceptible to Use in Fraud and Scams'

• The risk assessment is the Treasury's first into NFTs as a means of carrying out fraud and other crimes.
• The Treasury determined that NFT platforms "lack appropriate controls" to combat money laundering and sanctions evasion.

The U.S. Treasury Department said non-fungible tokens (NFTs) are "highly susceptible to use in fraud and scams and are subject to theft," in a new risk assessment about illicit finance, its first into NFTs as a means of carrying out fraud and other crime.

"The report determines that illicit actors can use NFTs to launder proceeds from predicate crimes, often in combination with other methods to obfuscate the illicit source of proceeds of crime," the Treasury said on Wednesday.

The Treasury also determined that NFT platforms "lack appropriate controls" to combat money laundering and sanctions evasion. Therefore it recommends further application of regulations to NFTs and the platforms they are traded on.

A U.S. government study into NFTs in March concluded that no specific legislation was required to deal with concerns around copyright and trademark infringement. The Treasury's assessment, however, addresses the financial aspect of the NFT market more directly.

Read More: NFT Providers May Need Registration to Comply With UK Money Laundering Rules