KYC-Chain’s Guide to NFTs and Identity Theft
KYC-Chain’s Guide to NFTs and Identity Theft
Non-Fungible Tokens or NFTs are unique blockchain-based certificates of ownership.
They are used to authenticate true ownership of digital assets and have been welcomed by many in the creative industries as they provide a new way for artists to be rewarded for their intellectual property – and for digital asset ownership to be traded. And NFTs aren’t only about art – they’re also being used to prove identity in Web3: their multiple and expanding functions as unique data sets on a blockchain are still very far from being fully understood and realized.
Trade in NFTs has exploded over the last two years – NFT transactions have grown exponentially, and the industry is expected to be worth around US$20 billion in the next five years.
Nevertheless, the space is also highly vulnerable to exploitation by criminals who can use loopholes offered by lax or absent Know Your Customer (KYC) processes to steal NFTs or use NFT platforms to launder money. In addition, there is a worrying growth in other forms of fraud, such as imposters selling NFTs that denote ownership of art that they do not own, in order to illegitimately benefit from others’ intellectual property.
Our Guide sets out the KYC/AML considerations for NFT platforms including:
- The current regulatory landscape
- NFT money laundering and fraud risks
- How Automated KYC can help NFT platforms scale efficiently and securely and provide greater access to the traditional financial system
By leveraging an effective and dynamic automated KYC solution, NFT platforms can navigate complex and evolving regulatory environments while mitigating their risk exposure and the ability of criminals to exploit this exciting new dimension of Web3.