Opinion: The Future of NFTs and the Tokenization of Art and Gaming
Disclaimer: The author’s opinions expressed in this article are personal and do not represent the views and opinions of crypto.news’ editorial team.
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 crypto.news, focuses on the future of NFTs.
In the previous interview, Quigley mentioned co-founding WAX, the first decentralized marketplace for trading video game virtual items. WAX.io is the number one web3 gaming platform designed to cater to the needs of blockchain gamers and NFT collectors. Initially built on the Ethereum blockchain, WAX later developed its own blockchain and wallet due to the high gas fees and slow transactions on Ethereum.
WAX blockchain boasts the largest NFT ecosystem, with over 250 million NFT assets and more than 30,000 dApps at NFT projects. The platform handles over 23 million transactions per day for more than 30,000 dApps and 15 million users. WAX blockchain is known for its speed, security, and commitment to being carbon-neutral, certified by Climate Care.
Quigley is optimistic about the future of NFTs despite a report by dappGambl stating that 95% of NFTs are practically worthless. The report also reveals that around 79% of all NFT collections remain unsold, and the values of popular NFTs like Bored Yacht Ape have dropped by approximately 90% from market highs. However, according to Zion Market Research, the NFT market is projected to reach $217.07 billion by the end of 2032, showing a compound annual growth rate of around 22.05% from 2024 to 2032.
Art NFTs gained significant attention in 2021, with artists minting, exhibiting, and auctioning their works as NFTs. Quigley believes that global art businesses like Christie’s, Sotheby’s, and Phillips will play a crucial role in handling art NFTs. At WAX, the focus is on collectible NFTs and game NFTs with high trading volume, like the Earthen WAX Walker NFT, which aims to generate interest among collectors and contribute to reforestation efforts.
The higher tax rate applied to collectible NFTs, currently at 28%, reflects the IRS’s anticipation of significant growth in the collectible NFT sales area. The global collectibles market is expected to grow at a rate of around 4% during the forecast period 2022-2028, justifying the higher tax rate.
The IRS recently issued the draft form 1099-DA for reporting NFTs, but its final scope is subject to change based on public comments. If the draft form is finalized, NFT markets will need to issue 1099-DA forms due to the higher tax rate for collectible NFTs.
A new NFT project called Dr. Green NFTs aims to bring cannabis sales into the NFT markets, providing holders of Ethereum-based NFTs the opportunity to legally sell recreational cannabis worldwide. The global cannabis market is expected to reach approximately $33 billion by the end of 2024 and over $69 billion by 2029.
The SEC’s enforcement actions in the NFT area have classified some NFT projects as securities. Poorly drafted offering documents and features like fractionalizing an NFT, offering passive revenues, or participating in governance can lead to securities classification by the SEC. To avoid regulatory compliance issues, NFT projects should carefully consider the features and offering documents before launch.
Ethereum’s dominance in the NFT market may be impacted by the SEC’s potential regulation of ETH as a security. The SEC issued a Wells notice to Consensys, an Ethereum-based company, and the New York State Attorney General’s Office filed a lawsuit against crypto trading platform KuCoin, alleging that ETH is a security. However, BlackRock CEO Larry Fink is not concerned about the SEC classifying ETH as a security.
In conclusion, the future of NFTs looks promising despite challenges and regulatory considerations. WAX.io continues to innovate in the NFT space, focusing on collectibles and game NFTs while maintaining its commitment to being eco-friendly.
