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This is Part Three of a three-part series interview with William Quigley, a cryptocurrency and blockchain investor and co-founder of WAX and Tether, conducted by Selva Ozelli exclusively for Global Crypto News. Part One covers topics related to Sam Bankman-Fried’s and Changpeng Zhao’s prison sentences, while Part Two discusses cryptocurrency and banking. This final part explores the future of NFTs.

1. WAX.io: Leading the Way in Web3 Gaming

WAX was created to meet the needs of blockchain gamers and NFT collectors. Initially built on the Ethereum blockchain, the high gas fees and slow transaction speeds prompted the development of the WAX blockchain and wallet.

The WAX blockchain boasts the largest NFT ecosystem, with over 250 million NFT assets and more than 30,000 dApps. It processes more than 23 million transactions daily for 15 million users. The blockchain is known for being ultra-fast, secure, and carbon-neutral.

As a leading blockchain for NFTs, dApps, and digital gaming based on daily active users, WAX was designed to be eco-friendly. Its carbon-neutral status is certified by Climate Care, underscoring its commitment to environmental sustainability.

To celebrate Earth Day, WAX launched the Earthen WAX Walker NFT drop. For each NFT claimed, a tree will be planted. This initiative combines digital collectibles with tangible environmental benefits, supporting global reforestation efforts.

2. The Future of NFTs

A 2023 report found that 95% of NFTs are worth practically nothing, with around 79% of all NFT collections remaining unsold. Despite this, the NFT market was valued at $36.12 billion in 2023 and is projected to reach $217.07 billion by 2032, growing at a compound annual growth rate of around 22.05%.

The global NFT market cap is currently $68.68 billion, showing a 1.12% change in the last 24 hours. Most of this growth is expected in utility NFTs, collectible NFTs, and web3 gaming NFTs.

3. Art NFTs: A New Era for the Art World

In 2021, art NFTs disrupted the art world, enabling artists to mint, exhibit, and auction their works while investors could buy, sell, and trade art NFTs. According to Nicole Sales Giles, VP and director of digital art sales at Christie’s, the web3 art community is collaboratively building something special.

The global art market dropped 4% last year to $65 billion. Art NFTs are likely to be handled by major art businesses like Christie’s, Sotheby’s, and Phillips. At WAX, the focus is on collectible NFTs and game NFTs with high trading volumes. The Earthen WAX Walker NFT drop aims to generate significant collector interest, supporting tree planting efforts.

4. Taxation on Collectible NFTs

Gains from collectible NFTs are taxed at a 28% rate, higher than current capital gains rates. The global collectibles market was valued at more than $360 billion in 2020 and is expected to grow at a rate of around 4% from 2022 to 2028. The higher tax rate indicates that the IRS anticipates growth in collectible NFT sales and aims to tax it accordingly.

5. IRS Draft 1099-DA Form and NFTs

The IRS recently issued the draft 1099-DA form, which includes NFTs as reportable digital assets. If finalized, NFT markets will need to issue 1099-DAs, as collectible NFTs are taxed at a higher rate.

6. Cannabis NFTs: A New Frontier

A new NFT project aims to bring cannabis sales into the NFT markets. Cannabis billionaire Maximillian White has launched Dr. Green NFTs, allowing holders to sell recreational cannabis legally worldwide. The global cannabis market value is expected to reach approximately $33 billion by 2024 and over $69 billion by 2029, growing at a compounded annual growth rate of 15.4%.

7. SEC Enforcement Actions on NFTs

The SEC has classified certain NFT projects as securities, bringing enforcement actions against them. In August 2023, the SEC charged Impact Theory, LLC with conducting an unregistered offering of crypto asset securities in the form of NFTs, raising approximately $30 million. Two weeks later, the SEC charged Stoner Cats 2, LLC with a similar violation, raising $8 million.

These cases highlight the importance of carefully drafting NFT offering documents to avoid securities classification. Features like fractionalizing an NFT, offering passive revenues, or participating in governance can lead to NFTs being classified as securities, necessitating regulatory compliance.

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