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 Quigleya cryptocurrency and blockchain investor and co-founder of WAX and Tether, led by SelvaOzelli exclusively for crypto.news. The first part is about Prison sentences of Sam Bankman-Fried and Changpeng Zhao. The second part is about cryptocurrency 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 video game virtual items. Tell us about WAX.io, the number one web3 gaming platform.

WAX was created specifically to handle the needs of blockchain and gamers NFTs collectors. We initially built WAX on the Ethereum blockchain; however, exorbitant gas fees and slow platform speed led us to develop the blockchain and WAX wallet.

The WAX ​​blockchain has the largest NFT ecosystem, with over 250 million NFT assets and more than 30,000 dApps in NFT projects. The WAX ​​platform handles more than 23 million transactions per day for more than 30,000 dApps and 15 million users. Blockchain in wax is ultra-fast, secure and zero-carbon.

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 isn’t just a statement: it’s certified by Climate Care, demonstrating our commitment to maintaining minimal environmental impact.

In celebration of Earth Day, we launched 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 that benefit our planet, offering a unique digital art collection that will allow us to contribute to global reforestation efforts.

2) A report from crypto analytics firm dappGambl from 2023 found that 95% of NFTs are worth practically nothing. The report found that following the massive hype around NFTs between 2021 and 2022, approximately 79% of all NFT collections remained unsold. The popular Bored Yacht Ape NFT values ​​are down around 90% from market highs. When NFT markets crashed in late 2021, I wrote that NFTs were here to stay. What are your thoughts on the future of NFTs?

According to Zion Market Research, the size of the NFT market was appreciated to $36.12 billion in 2023 and is expected to reach $217.07 billion by the end of 2032, showing a compound annual growth rate of about 22.05% from 2024 to 2032.

Non-fungible Token Industry Outlook | Source: Zion Market Research

The global NFT market capitalization today is $68.68 billion, a change of +1.12% in the last 24 hours. I expect the majority of this growth to be in utility NFTs, collectible NFTs, and web3 gaming NFTs.

3) In 2021, art NFTs seemed like the biggest disruptor in the art field, with artists minting, exhibiting, and auctioning and investors buying, selling, and trading art NFTs. Nicole Sales Giles, The Vice President and Sales Director of Post-War Digital Art and Contemporary 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 look back on today’s camaraderie of artists, builders, curators and collectors as the time “when it all began.” What are your thoughts and opinions on the future of art NFTs?

The art market fallen 4% last year to $65 billion a year globally, with some art sales making up the majority of that number. Art NFTs are likely to be handled by global art companies such as Christie’s, Sotheby’s, and Phillips.

At WAX, we focus on collectible NFTs and game NFTs with high trading volume by owners. We hope our collector’s item NFT earth wax walker drop generates intense interest from collectors, so we can plant a lot of trees.

4) Gains 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 investments?

The global collectibles market, valued at over $360 billion in 2020, is expected grow at a significant rate of around 4% during the forecast period 2022-2028. Therefore, the higher tax rate of 28% shows that Revenue Agency (IRS) expects strong growth in the area of ​​collectible NFT sales and would like to tax it at a higher tax rate than the current capital gains rate.

Global collectibles market | Source: UnivDatos

5) The IRS recently issued the 1099-DA form in draft form. Jonathan Cutler, a senior manager on Deloitte’s Washington National Tax team advising on digital asset information reporting, said: “Based on the August 2023 digital asset reporting proposal regulations, an NFT is included as a reporting item when it is a “digital representation of value recorded on a cryptographically protected distributed ledger (or any similar technology).” In April, the IRS released the draft form on which an NFT or other digital asset could be reported, Form 1099-DA. Importantly, the cover notes that this first draft release is based only on the proposed regulations and is subject to change based on public comments, the volume of which appears to be significant. Until these comments are digested by the IRS and Treasury, it is difficult to glean meaningful information, whether from this draft form or others, about the ultimate scope of the definition of “digital asset” for reporting purposes.” Do you have any comments on the draft Form 1099-DA that applies to NFTs?

If the draft 1099-DA is finalized in its current form, NFT marketplaces will have 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 the first of its kind Dr. Green NFTs sold on my NFT marketplace drgreennft.com which will allow Ethereum-based NFT holders to legally sell recreational cannabis worldwide The value of the global cannabis market is expected to reach approximately $33 billion by the end of 2024 and will exceed $69 billion by 2029 with a compounded AGR of 15.4%. Do you have any thoughts or comments on this first-of-its-kind cannabis NFT initiative?

No comments.

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, conducting an unregistered offering of cryptocurrency securities in the form of NFTs. Impact Theory raised about $30 million from hundreds of investors through the offering claiming to be the next Disney company, your former employer. Two weeks later, in September 2023, the The SEC charged and entered into a settlement with Stoner Cats 2, LLC (SC2), discovering that SC2’s NFT offering, called Stoner Cats, which raised $8 million, was a security, and therefore SC2 had engaged in an unregistered offering of a security. What are your thoughts on the SEC’s enforcement actions in the NFT area?

I wasn’t aware of the SEC’s two settlements with NFT projects, with the upcoming Disney Company, and with Mila Kunis and Ashton Kutcher’s Stoner Cats animated web series.

However, it seems to me that in these two cases the NFT offering documents were inadequately drafted by their lawyers. The three main things that could give rise to the classification of NFT securities are splitting an NFT, offering passive revenue, or participating in governance, such as staking. Therefore, the SEC found that these NFTs were being offered and sold to investors as investment contracts and, therefore, were securities. As a result, 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, offering documents of an NFT should be carefully considered prior to launch.

8) The vast majority of existing NFT projects in art, gaming, sports, metaverses, and even cannabis are built on the Ethereum blockchain. In April, the The SEC issued a Wells Alert to Ethereum-based Consensys, revealing that the agency could take potential action against Consensys for violating federal securities laws through its MetaMask Staking and other products. The SEC seeks to regulate ETH as a security after Ethereum successfully changed its consensus mechanism from proof-of-work to proof-of-stake in September 2022. This view is also shared by the New York State Attorney General’s Office ( NYAG) ), which, ahead of the SEC on March 9, 2023, filed a lawsuit charging the cryptocurrency trading platform KuCoin for “failing to register as a securities and commodities broker and falsely present itself as a trading exchange,” specifically claiming that the ETH traded on the platform is a security. BlackRock CEO Larry Fink said he is not concerned about the SEC classifying Ethereum’s ETH as a security. What do you think about the potential classification of ETH as a security? What impact will all this have on the NFT market?

No comment.

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