The Royal United Services Institute (RUSI), the world's oldest and the UK's leading defense and security think tank, warns that non-fungible tokens (NFTs) are actively being exploited by money launderers the same way the bad actors exploit physical art. The RUSI found that most NFTs are purchased with cryptocurrencies exploited for malicious means.
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The organization called for stricter regulatory measures for NFT-focused marketplaces similarly used by financial institutions like KYC/AML.
"A system of ‘know your customer’ policies and ongoing monitoring, similar to those used in the traditional art market and in compliant cryptocurrency exchanges, needs to be implemented," the RUSI said.
The experts note an art heist is nothing new for the NFT realm. Criminals can hack into user accounts on NFT marketplaces and transfer the tokens to their accounts. After transferring the NFTs, the hacker can "quickly sell" the stolen token(s) and attempt to launder the proceeds, the RUSI added. It remains unclear though how one can sell NFTs "quickly" given the low liquidity of this market.
As iHodl earlier reported, Defiance ETFs, a thematic exhange-traded fund (ETF) company, launched a new ETF focused on NFTs. The so-called Defiance Digital Revolution ETF is available under the NFTZ ticker. While the ETF does not invest in cryptocurrencies directly, it offers exposure to the cryptocurrency market by tracking a blockchain-and-NFT-focused index.
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