Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.
This is part three of a three-part interview series with William Quigley, a cryptocurrency and blockchain investor and co-founder of WAX and Tether, conducted by Selva Ozelli exclusively for crypto.news. The first part deals with the prison sentences of Sam Bankman-Fried and Changpeng Zhao. The second part is about cryptocurrencies and banking. The third part is about the future of nfts.
1) In the first part of our interview, you mentioned that you co-founded Worldwide Asset eXchange (WAX), the first decentralized marketplace for trading virtual video game items. Tell us about WAX.io, the number one web3 gaming platform.
WAX was created specifically to meet the demands of blockchain players and nft collectors. We initially built WAX on the ethereum blockchain; However, exorbitant gas fees and slow platform led us to develop the WAX blockchain and wallet.
WAX blockchain has the largest nft ecosystem, with over 250 million nft assets and over 30,000 dApps in nft projects. The WAX platform handles over 23 million transactions per day for over 30,000 dApps and 15 million users. Wax blockchain is ultra-fast, secure and carbon neutral.
As the world's leading blockchain for nfts, dApps and digital games, based on the number of daily active users, WAX was designed from the ground up to be eco-friendly. Our carbon neutral status is not just a statement: it is certified by Climate Care, demonstrating our dedication to maintaining a minimal environmental footprint.
This Earth Day, we are launching the Earthen WAX Walker nft drop. For every Earthen Walker nft claimed, WAX will plant a tree. This initiative combines our passion for innovative digital collectibles with tangible actions to benefit our planet, offering an exclusive digital art collection that will allow us to contribute to global reforestation efforts.
2) A report from crypto analytics firm dappGambl from 2023 nfts/dead-nfts/” target=”_blank” rel=””>found that 95% of nfts are worth practically nothing. The report found that following the immense hype over nfts between 2021 and 2022, around 79% of all nft collections have not been sold. Popular Bored Yacht Ape nft values are down around 90% from market highs. When the nft markets crashed at the end of 2021, nfts-here-to-stay” target=”_blank” rel=””>wrote that nfts are here to stay. What are your views on the future of nfts?
According to Zion Market Research, the size of the nft market was nft-market” target=”_blank” rel=””>valued will reach $36.12 billion in 2023 and is projected to reach $217.07 billion by the end of 2032, showing a compound annual growth rate of around 22.05% between 2024 and 2032.
The global nft market capitalization today is $68.68 billion, a change of +1.12% in the last 24 hours. I expect most of this growth to come in utility nfts, collectible nfts, and web3 gaming nfts.
3) In 2021, art nfts looked like the biggest art disruptor, with artists minting, exhibiting and auctioning and investors buying, selling and trading art nfts. Nicole Sales Giles, The vice president and director of digital art sales for contemporary and post-war art at Christie's said: “At Christie's we view digital art as simply another category of contemporary art collecting. The web3 artistic community is collaboratively building something very special. I believe that in the future, the art world will remember the current camaraderie between artists, builders, curators and collectors as the time when “it all began.” What are your thoughts and views on the future of art nfts?
the art market abandonment 4% last year to $65 billion a year globally, with a few art sales accounting for most of that figure. Art nfts are likely to be managed by global art companies such as Christie's, Sotheby's and Phillips.
At WAX, we focus on collectible nfts and gaming nfts with high trading volume by owners. We hope that our collectible nft Earth Wax Walker drop generates intense interest in collectors so we can plant many trees.
4) Earnings from collectible nfts are taxed at a rate of 28%, which is higher than current capital gains rates. What do you think about the higher tax rate applied to collectible nfts? And will the higher tax rate hinder nft collectible investment?
The global collectibles market, valued at more than $360 billion in 2020, is expected will grow at a significant rate of around 4% over the forecast period 2022-2028. Therefore, the 28% higher tax rate shows that the Internal Revenue Service (IRS) anticipates a lot of growth in the area of collectible nft sales and would like to tax it at a higher tax rate than the current profit rate. of capital.
5) The IRS recently issued the 1099-DA draft form. Jonathan Cutler, a senior manager in Deloitte’s Washington Domestic Tax team advising on digital asset reporting, said: “Under the August 2023 digital asset reporting proposal regulations, an nft is included as reportable when it is a “digital representation of value that is recorded on a distributed ledger with cryptographic (or any similar technology) security.” In April, the IRS published the draft form on which an nft or other digital asset could be reported, Form 1099-DA. Importantly, the cover page notes that this preliminary draft is based solely on the proposed regulations and is subject to change based on public comments, the volume of which appears to be significant. Until the IRS and Treasury assimilate those comments, it is difficult to obtain meaningful information, whether from this draft or otherwise, about the ultimate scope of the definition of “digital asset” for reporting purposes.” Do you have any Comment on draft Form 1099-DA applying to nfts?
If the draft 1099-DA is finalized in its current form, nft marketplaces will be required to issue 1099-DAs. After all, collectible nfts are taxed at a higher rate.
6) A new nft project takes cannabis sales out of dark web markets and into nft markets. Cannabis billionaire Maximillian White, often referred to as the 'Elon Musk of cannabis', said: “I signed a partnership deal with British rapper Fredo just weeks after his release from Dubai prison to launch Dr. Green, the first of its kind nfts sold on my own nft marketplace drgreennft.com, which will allow ethereum-based nft holders to sell recreational cannabis legally worldwide. of the global cannabis market to reach approximately $33 billion by the end of 2024 and exceed $69 billion by 2029 with a compounded AGR of 15.4%.” Do you have any thoughts or comments on this cannabis nft initiative, the first of its kind?
No comment.
7) nfts appear to be the next wave of SEC enforcement actions in the digital asset space. Last year, the SEC classified two nft projects as securities. In August 2023, the The SEC charged Impact Theory, LLC, a Los Angeles-based media and entertainment company, making an unregistered offering of cryptoasset securities in the form of nfts. Impact Theory raised approximately $30 million from hundreds of investors through the offering by claiming to be the next company for Disney – its former employer. Two weeks later, in September 2023, the SEC Charges and Settles Stoner Cats 2, LLC (SC2), discovering that SC2's nft offering, which raised $8 million called Stoner Cats, was a security and therefore SC2 had engaged in an unregistered offering of a security. What are your views on the SEC's enforcement actions in the nft area?
I was not aware of the two SEC settlements with nft projects, the upcoming Disney company and the animated web series called Stoner Cats by Mila Kunis and Ashton Kutcher.
However, it seems to me that in both of these cases, the lawyers drafted the nft offering documents poorly. The three main things that could lead to nft securities being classified are fractionalizing an nft, offering passive income, or engaging in governance such as staking. The SEC then found that these nfts were offered and sold to investors as investment contracts and were therefore securities. Accordingly, these nft projects violated federal securities laws by offering and selling nfts to the public in an unregistered offering that was not otherwise exempt from registration.
Given the regulatory compliance involved in issuing securities, such classification should be avoided and the features and offering documents of an nft should be carefully considered before its launch.
8) The vast majority of existing nft projects in art, gaming, sports, metaverses, and even cannabis are based on the ethereum blockchain. In April, the SEC issued Wells notice to ethereum-based Consensys, revealing that the agency could potentially take action against Consensys for violating federal securities laws through MetaMask Staking and other products. The SEC seeks to regulate eth as a security after ethereum successfully changed its consensus mechanism by moving from proof-of-work to proof-of-stake in September 2022. This opinion is also shared by the New York State Attorney General's Office (NYAG ). ), which, before the SEC on March 9, 2023, filed lawsuit accusing crypto trading platform KuCoin for “failing to register as a securities and commodities broker and falsely presenting itself as an exchange,” in particular by claiming that the eth traded on the platform is a security. BlackRock CEO Larry Fink stated that he is not concerned about the SEC classifying ethereum's eth as a security. What do you think about the possible classification of eth as a security? How will this affect the nft market?
No comment.
