Turkey Drafting Crypto Regulation — Central Bank Says No Intention to Ban Cryptocurrencies

The Turkish government is reportedly creating a regulatory framework for cryptocurrencies after two crypto exchanges in the country abruptly halted trading and are now being investigated for fraud. The government is reportedly planning to establish a central custodian bank among other initiatives.

• The Turkish government is working on cryptocurrency regulation. Bloomberg reported on Tuesday that “The government is planning to establish a central custodian bank to eliminate counterparty risk,” citing a senior official familiar with the plans.

• The Treasury & Finance Ministry, Capital Markets Board and financial crimes watchdog Masak are involved in establishing the crypto framework, the publication conveyed, adding that its preparations are expected to be completed within a few weeks.
• Other than creating a central custodian bank, the Turkish authorities are also considering imposing a capital threshold for crypto exchanges and education requirements for executives at those companies.
• Furthermore, the governor of the Turkish central bank, Sahap Kavcioglu, confirmed last week in an interview with local broadcasters, Kavcioglu, that the country’s Finance Ministry is working on wider regulations regarding cryptocurrencies. The governor added that the bank does not intend to ban cryptocurrencies. The central bank, however, recently banned the use of cryptocurrencies as a means of payment.

• Following the central bank banning cryptocurrencies for payments, two Turkish crypto exchanges abruptly halted trading. Thodex and Vebitcoin are now being investigated for fraud. Sixty-two people have been detained in connection with Thodex and four people are detained in relation to Vebitcoin.