Non-fungible tokens (NFTs) are rapidly becoming more and more popular.
What is the importance of NFTs?
Each non-fungible token is composed of unique data (e.g. visual, audio, metadata), as opposed to fungible tokens that are all uniform such as 1 BTC, USDT, etc. To incorporate this element of uniqueness, as well as a financial value, NFTs are thus a new token standard, such as ERC-721 on the Ethereum chain or TRC-721 on the Tron chain, etc. NFTs first came to prominence in the blockchain space with the advent of the CryptoKitties game in 2017 and have since gone on to be used in art, real estate and other asset markets.
From now on NFTs are also supported on Coinfirm’s AML platform.
Creating an AML Risk Report for a blockchain address that is a smart contract for an NFT shows the precise information:
An AML Risk Report for an example of such an address gives a medium risk score. However, information about it being a smart-contract for an NFT is clearly presented on among possible risk indicators.
Why do non-fungible tokens matter in terms of AML? Commonly used in digital art markets – for example on most popular OpenSea or Rarible platforms. And as in the case of the traditional art market – such investments are hard to evaluate and could potentially be a way of money laundering.
NFTs are a rapidly growing area in blockchain and cryptocurrencies as the real-world applications of NFTs begin to incorporate more of the traditional economy. Therefore, support for detailed NFT tracing will be soon extended – stay tuned!