NFT’s growing popularity has seen a simultaneous increase in the incidents of crime caused by leveraging NFTs. Instances of money laundering and was trading have increased dramatically ever since the advent of NFTs. The recent findings by a Singapore-based company Chain analysis have brought some shocking findings to the limelight. Read out this article to know more about the rise of NFTs, the increase in crime, and the global response by various governments.
What are NFTs and why is NFT so popular?
NFTs are a type of digital ownership certificate. They can store data on the blockchain and are being widely used to buy and sell ownership rights of digital assets. The best feature of an NFT is that it is hard to replicate.
They have been used to sell things from paintings to digital videos. NFTs also promise the great potential of adoption by the gaming industry. The exclusive ownership of many digital gaming assets such as characters, gun skins etc can be sold to players via NFTs
From $106 million in 2020 to $44.2 billion in 2021, the value of transactions through NFTs has increased dramatically ever since the pandemic forced the entire nation to go digital. The adoption and adaptation of NFTs by celebrities like Amitabh Bachan and Salman Khan have further hastened the widespread adoption of NFTs.
How NFTs are Being Leveraged for Crimes?
The report stated that many people are engaging in wash trading to create a false impression regarding the value of NFTs. Wash trading simply refers to a transaction with no actual buyer. It involves two sellers buying and selling NFTs from each other to hike the prices of an asset. This causes speculation and creates a false illusion in the minds of retail and inexperienced investors regarding the value of NFTs.
There has also been an increase in money laundering through the use of NFTs. NFTs are digital assets and cannot be traced easily. Governments across the world are responding to this by trying to regulate NFTs Authorities are also apprehensive regarding the possibilities of tax evasion with the help of NFTs.
As NFTs continue to become more and more popular, remains to be seen as to who would win in this battle and whether regulators would be able to keep up with advancing technologies.
Stay tuned with Stanford Arts Reviews for more updates.
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