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.
Panelists Tim Baileyvice president of global business and operations, Red Date technology, William Quigleya cryptocurrency and blockchain investor and co-founder of Wax and Tether, and I, Selva Ozelli, were honored to be invited to join the Eurasia Blockchain Summit with our panel discussion on the “Future of Tokenization.”
Tim Bailey noted that while tokenization is still in its early stages, Red Date technology is one of the co-architects of a new global digital infrastructure for digital payments and central bank digital currencies (CBDC). So far, 134 countries and monetary unions, representing 98% of global GDP, are explorer a CBDC that will tokenize global financial and banking systems. Three countries have fully launched a CBDC: the Bahamas, Jamaica and Nigeria.
Red Date technology is the technical architect of several products, including a blockchain-based service network (BSN) and a universal digital payments network (UDPN), which is a global messaging network supporting government-regulated digital currency systems involving regulated digital currencies and stablecoins. and CBDCs. Tim Bailey said on the panel:
“Universal Digital Payments Network (udpn) has successfully launched an all-in-one Digital Currency Sandbox that enables central and commercial banks to test and create innovative use cases with all forms of regulated digital currencies in a real-world environment. UDPN's all-in-one Digital Currency Sandbox will help prepare financial institutions for the new digital financial world and create innovative new services based on insights from the UDPN team's work over the past year with more than 25 commercial banks , central banks and technology companies. I enjoyed participating in the 'The future of tokenization'panel with William Quigley and Selva Ozelli at the Eurasian Blockchain Conference in Cappadocia, Turkey, today. Thanks to Cenk, Nurdem and their team for hosting us at this great event.”
The UPDN team contributes to the global effort carried out by various organizations, including the International Monetary Fund, the World Bank, the Central Bank of Switzerland, the Guardian Project of the Monetary Authority of Singapore, the Agorá Project of the Bank for International Settlements with a consortium of central banks, and the Institute of International Finance (IIF), which guest the private financial sector to join its exploration of how tokenization can improve the functioning of wholesale cross-border payments, and the Basel Committee, the global standards setter for regulating banks. The company works with public sector players as well as private financial sector partners such as HSBC, Standard Chartered and Deutsche Bank to test new forms of digital currency and digital asset technologies that will ultimately benefit the global economy.
William Quigley explained that he realized the revolutionary potential of tokenization in 2014 when he co-founded the world's first and most traded stablecoin, Tether. Because tokenization specifically allows assets and their rights to be digitally represented through the use of tokens on blockchains. He foresaw that this could transform not only the trading of digital assets, including nfts, but also any asset that can be represented digitally, such as stocks, bonds, and other assets. A disruptor of the conventional financial system and a pioneer in the digital use of traditional currencies, he co-founded Tether tokens which are based on multiple blockchains.
William also predicted the immense utility and potential of nfts in the global tokenization trend to unlock value and create new markets. With that vision, he created WAX.io in 2017, during a digital asset bull market when the price of btc rose from $1,000 to $20,000 by the end of the year. Like many projects during 2017, he initially built Wax.io on the ethereum blockchain; However, exorbitant gas fees, slowness, energy inefficiency, and the platform's inability to handle large transaction volumes led him to develop the sustainable Wax blockchain and wallet specifically to handle the demands of gaming players. blockchain and nft collectors. William expects, and Tim Bailey said he agrees, that most of the nft market growth will come in utility nfts, collectible nfts, and web 3 gaming nfts in the future. William added:
“I believe that within the next 10 to 15 years the world will transition to using digital currencies and that paper currencies will be a thing of the past.”
I agree with Tim and William that tokenization of the global financial system is the direction global financial markets are heading. What has been encouraging in this process is that global regulators have been collaborating on designing the digital asset legal framework in the areas of taxation, money laundering and banking laws so that similar laws apply in all jurisdictions.
The Organization for Economic Cooperation and Development crypto-assets.htm” target=”_blank” rel=””>approved the crypto Asset Reporting Framework (CARF) in August 2022. This framework provides for standardized reporting of tax information on crypto asset transactions through CRS, with a view to automatically exchanging such information. So far, 48 countries have committed to implementing CARF.
The Financial Action Task Force (FAFT) issued Money Laundering Standards on Virtual Assets and Virtual Asset Service Providers (VASPs) in 2019. Chainalysis reported that self-reported FAFT surveys from 58 jurisdictions show:
- All jurisdictions (100%) have conducted or are in the process of conducting a risk assessment covering virtual assets and VASP transactions;
- Five jurisdictions (9%) have or are in the process of explicitly banning virtual assets and VASP transactions (China, Egypt, Saudi Arabia and in process: Seychelles, Indonesia);
- Ten jurisdictions (17%) have not yet established a regulatory framework requiring VASPs to register or license and implement AML/CFT measures (Vietnam, New Zealand; in process: Türkiye, Argentina, Colombia; along with the five jurisdictions mentioned above that have or are in the process of explicitly banning virtual assets and VASP transactions).
The Basel Committee, the body that sets global standards for the regulation of banks, has crypto-asset-rules-for-banks-to-2026/#:~:text=The%20Group%20of%20Central%20Bank,postponed%20to%20January%201%2C%202026.” target=”_blank” rel=””>pushed support the implementation of the Basel rules for digital assets for one year until January 2026.
In the US, the FTX bankruptcy was one of the largest financial frauds and a watershed moment, whose knock-on effects included a digital asset market crash, a crypto banking crisis in 2023 with bankruptcies of five US banks, regulatory reactions and more. bankruptcies. These unfavorable developments in the US have led to increasing scrutiny and widespread calls for regulation of the digital asset industry, which is regulated by the US Securities and Exchange Commission, the US Trade Commission Commodity Futures, the Financial Crimes Enforcement Network and the Office of Foreign Assets Control. and the Internal Revenue Service (IRS).
Therefore, the digital asset industry is encouraging House leaders will support the Financial Innovation and technology (FIT) Act for the 21st Century legislation (HR 4763) to establish a U.S. regulatory regime for digital assets, which will come up for a vote during the final week of May by the United States House of Representatives. representatives.
(1) The bill suggests dividing digital asset oversight functions between the SEC and the CFTC. The bill also includes provisions for the regulation of stablecoins and the protection of whistleblowers;
(2) The bill contains an anti-central bank digital currency bill (anti-CBDC bill) (HR 1122), which seeks to prohibit the Federal Reserve from issuing digital currency to consumers.
Additionally, the IRS recently issued draft Form 1099-DA which will be used by digital asset brokers (which would include centralized exchanges, decentralized exchanges, wallet providers that allow transactions and transfers to take place, as well as bitcoin ATMs) to report digital asset transactions next year.
The data in the draft Form 1099-DA includes the date of acquisition of the digital assets, the cost basis of said instruments, the date and time of the transaction in question, the sales proceeds, as well as the gross receipts of all digital asset transactions. In essence, the data for reporting digital asset transactions on the draft Form 1099-DA is similar to the data currently reported on Form 1099-B income from brokerage and barter transactions in stocks, commodities, regulated futures contracts, foreign currency contracts, forward contracts, debt instruments, options, securities futures contracts, etc. It should be noted that profits from digital asset collectible nfts are taxed at a rate of 28%, which is higher than current capital gains rates.
