Monday, May 29, 2023

Latest Crypto News: EU Allows Banks To Hold 2% Capital In Crypto, Porsche’s NFT Launch Crashes

Outlook Money

Latest Crypto News: EU Allows Banks To Hold 2% Capital In Crypto, Porsche’s NFT Launch Crashes

Here are some of the latest developments from the world of crypto over the past few days

The European Union Parliament on January 25, 2023 approved new banking regulations that will allow banks in the EU to hold a miniscule portion of their capital in cryptocurrencies, according to a report by Binance.

Banks can hold a maximum of two per cent of their capital in Bitcoin and other cryptocurrencies, according to the latest directive.

The European Union has continued its push for clear regulations for the crypto industry. The latest development comes following the final vote on the EU’s draft legislation to regulate cryptocurrencies, courtesy the Markets in Crypto-Assets Regulation (MiCA), which was postponed until April 2023 due to technical difficulties.

The new directive stipulates that volatile cryptocurrencies like Bitcoin will be considered the riskiest investment, and the EU is now following the Bank of International Settlement (BIS) guidelines in this regard, which essentially divides cryptos into two distinct groups.

Group 1 represents tokenised assets and stablecoins with approved stabilisation mechanisms, while Group 2 includes stablecoins without BIS-approved stabilisation mechanisms and volatile cryptocurrencies, according to the report.

“This group classification entails that Bitcoin, Ethereum, and other cryptos require banks to apply a ‘risk weight’ of 1,250 per cent. This means that EU banks must hold more than one euro of free capital for every euro of cryptocurrencies,” the report says.

The EU Parliament’s economic committee also endorsed several temporary derogations to give banks more time to adjust, the report further said.

Porsche’s NFT Collection Launch Crashes Despite Ambitious Plans

German luxury car brand Porsche has reportedly managed to sell only about 25 per cent of its first collection of 7,500 non-fungible tokens (NFTs), despite its ambitious plans to venture into the NFT space.

In just over 24 hours, some 1,909 of the NFTs had sold for 0.911 Ethereum per unit, or about $1,414 as of January 25, 2023, according to a report by Binance.

“Our holders have spoken,” the brand’s dedicated Web 3.0-focused account said on Twitter.

“We’re going to cut our supply and stop the mint to move forward with creating the best experience for an exclusive community. More info in the next hours,” it said.

Porsche’s NFT mint closed on January 25, 2023, 6 am UTC-5, according to the company.

The German automaker first presented its NFT collection, which also features images of the iconic Porsche 911 Carrera, at the Art Basel show last November, Fortune reported.

Commentators have attributed the company’s failure to attract solid market interest to the carmaker’s insufficient understanding of the rules that govern the crypto markets and their detachment from Porsche’s traditional sales channels, the report by Binance said.

Some industry observers criticised Porsche for its lack of sufficient cooperation with crypto space leaders and expecting the sale would trigger high sales just because it was launched by an internationally recognised brand, the report added.

Saudi Central Bank to Experiment With CBDC

The Saudi Central Bank (SCB), previously known as SAMA, is now the latest financial entity to join the cryptocurrency industry as it unveiled its plans to experiment with central bank digital currency (CBDC ) alongside local banks and fintech firms in a phase-by-phase project.

According to agency reports, its current phase is where it centres on leveraging CBDC as a useful tool for a type of domestic wholesale financial instrument in collaboration with other financial institutions, a report by Binance said.

According to the report, SCB is exploring several sectors, including the economic impact, market viability, and potential application of CBDC-based payment solutions.

Therefore, the plan to launch the centrally-backed currency may be delayed as the decision is still pending.

The Saudi-based news outlet Saudi Gazette noted in a report published on January 23, 2023 that “the SCB stressed that no decision has been made regarding the introduction of CBDC in the Kingdom. It continues to focus on exploring the benefits and potential risks of implementing CBDC.”

Additionally, according to the news outlet, the SCB will focus on devoting “informed decision-making” within the central bank and to the CBDC research within the central banking ecosystem.

The CBDC experiment is part of the broader Saudi Vision 2030 goals.