Turkish Govt. Planning to Establish a Central Custodian Bitcoin Bank to Remove Counterparty Risk
Turkey is now planning to regulate its cryptocurrency market after two exchanges Thodex and Vebitcoin’s collapse in a matter of days.
According to a senior official familiar with the plans, the government is planning to establish a central custodian bank to eliminate counterparty risk, reported Bloomberg.
While the plans haven’t been finalized yet, authorities are further pondering a threshold for cryptocurrency exchanges and education requirements for executives at such firms. Faruk Fatih Ozer, the fugitive founder of Thodex, was reportedly a high school dropout.
The regulatory framework could be expected to be completed in a few weeks, the official said. Financial crimes watchdog Masak, the Treasury & Finance Ministry, and Capital Markets Board are involved in the effort.
The turmoil started last week when Istanbul-based Thodex halted trading, and its CEO, Ozer, fled the country. A couple of days later, Vebitcoin, based on the southwestern city of Mugla, also halted its operations, citing worsening financial conditions. Its CEO Ilker Bas and three other employees were arrested on Monday.
Turkey has been seeing growing interest in Bitcoin, cryptocurrencies, and DeFi lately, with the Google search interest in them hitting new highs. The daily trading volume in Turkey’s crypto markets reached $1.6 billion over the past 24 hours, as per CoinGecko.
This has been due to Turkish citizens seeking to protect their savings and wealth from inflation and a weak currency. Turkish Lira (TRY) actually hit a fresh low of the year against USD on Monday this week.
It is among the worst performers of this year whose latest hit came after US President Joe Biden said he would officially recognize the 1915 massacres of Armenians in the Ottoman Empire as a genocide. Turkey sharply criticized the White House’s decision and said it undermined trust and friendship.
Additionally, Central Bank Governor Sahap Kavcioglu, appointed just a month back, said he would keep monetary policy tight for now. Turkey President Recep Tayyip Erdogan has fired three central bank chiefs in two years, eroding monetary credibility.