Non-fungible tokens (NFT) represent one of the latest innovative applications of blockchain technology. They as well pose new challenges for businesses to combat money laundering (AML). In this matter businesses also face difficulties to protect their intellectual property. In this article we will tell you how implementing KYC measures can benefit the industry as a whole.
NFT trading platforms attracted significant attention from the creative industries. As such industries provide creators with new opportunities to profit from their products. NFT trading platforms offer potential buyers and investors the opportunity to own a creator-sanctioned “original” copy of a work of art. This ownership is verified and updated on the decentralized blockchain. Thus, the NFT trading method was identified as a potential field of money laundering activity.
As the NFT market is not yet regulated properly, many do not apply KYC measures to verify the identity of the customers. Such a way one can buy NFT products at a higher price then sell them to a third account (which they indirectly own) at a lower price. This scheme effectively reduces their tax liabilities. And this is just one of the examples that analysts predict can be used to launder money.
The KYC implementation to verify the true ownership of NFT is still absent at many NFT marketplaces. It opens up the possibility for individuals who are neither owners nor creators of the art to fraudulently cash in on someone else’s work. Opaque property systems and the prices that some artworks can reach make the art trade vulnerable to exploitation by criminals.
The problem is that most NFT marketplaces do not currently integrate KYC checks for users who trade on their platforms. This is understandable given the lack of specific rules governing this new and exciting frontier of crypto space. All this leads to further regulation.
By implementing an automated KYC system, NFT marketplaces can assure their users that the NFT products they purchase are verified and real. It will also help prevent money laundering on their network — by implementing a reliable AML protocol that includes effective KYC. As well as compliance with all checks and AML will help NFT marketplaces gain trust among users. Accredited and reputable investors may as well be attracted.
NFTs are a highly decentralized type of asset whose value is determined by their creators. This value is changing rapidly, with unpredictable market dynamics. Anyone who sells NFT on a marketplace is likely to accept payment in the form of cryptocurrency or fiat currency. KYC technology can enable NFT marketplaces to collect information about users who send or receive payments in NFT transactions in a simple end-to-end solution. It is recognized as a reliable, cost-effective, and secure solution for NFT marketplaces to strengthen their position in the financial ecosystem of the future while reducing the risk of criminal exploitation.
IDTT provides the following solution — the use of the NFT token with the parameters of the KYC for the NFT trading platforms. We are specialists in the world of compliance and with the help of our token everyone can simplify and secure their KYC on any resources.
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