Insights
2021 Was the Year of NFT’S, Will 2022 Be the Year of NFT Regulation?
At the start of 2021, NFTs were only known to a niche group within the crypto community. By year’s end, the market had swelled to over $40 billion (1) and had become a rakish phenomenon even to non-crypto adopters due to a rapid surge in investor demand.
Large sums of money have historically been hidden and shuffled around under the guise of art. Agglutinating this commodity within a rapidly expanding digital market has inadvertently broadened the pool for money laundering under the guise of NFT trading.
As outlined in the updated guidelines for cryptocurrency providers, FATF considers NFTs, or "crypto-collectibles," distinct from cryptocurrency (2).
Despite not being regarded as virtual assets, NFTs are alluded to being categorized as other relevant types of financial assets that fall within the parameters of FATF standards.
How Is This Decision Being Interpreted?
The FATF’s current standing on NFTs has perpetuated an onus upon financial regulators within individual governments to decide how they should be classed and regulated in accordance with their behavior. While regulators are predictably lagging, a few interesting views have surfaced from law firms that are trying to ‘make it make sense’ by extrapolating citation 17 to concerning and even absurd ends.
Layla Tarar
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