The UK’s HM Treasury is reportedly considering or looking into possibly making changes to its existing Anti-Money Laundering and Counter-Terrorist Financing (AMLCFT) framework.
This may potentially mean that service providers of non-fungible token (NFT) trading platforms could get added within the applicable regulatory framework.
At present, crypto-related companies like digital asset custodians and virtual currency exchanges have to obtain proper authorization from the UK’s Financial Conduct Authority (FCA) so that they can provide crypto-assets services in the UK in a compliant manner.
But NFT marketplaces (or those offering so-called digital collectibles) that deal solely in NFTs are currently exempt from these requirements.
The HM Treasury’s most recent consultation indicates that NFT dealers need to be included within the current framework of AML/CFT guidelines because the associated financial crime risks they pose could be significant.
This latest consultation is expected to run until June 9 of this year.
This is a notable update because it emphasizes the increasing awareness of the possible risks related to dealing in NFTs and the necessity of adequate regulatory guidelines.
It should be noteworthy to examine just how these suggested amendments gradually unfold and what potential impact they could have on the nascent NFT space in the United Kingdom.
During the past few years, NFTs have really become a popular way for crypto enthusiasts to engage in digital transactions. However, NFTs are somewhat misunderstood because they’re not as valuable as what their holders might claim. For example, prominent personalities such as Logan Paul have admitted that they paid hundreds of thousands of dollars for speculative NFTs but then these so-called digital collectibles lost almost all of their value.
Even former Twitter (now X) CEO and founder Jack Dorsey had an NFT that was issued but it lost most of its value after being sold for millions of dollars. NFTs also pose great financial crime risks because they could easily be used for engaging in money laundering and other forms of abusive / illicit activities.