Turkish Government Plans Central Custodian Bank to Manage Crypto Risk: Report

The Turkish government plans on creating a central custodian bank to eliminate counterparty risk following the collapse of two cryptocurrency exchanges last week and as the country seeks to tighten its grip on the industry, Bloomberg reported, citing a senior official familiar with the plans. 

• Authorities are also contemplating a capital threshold for crypto exchanges and education requirements for the executives at the firms, Bloomberg said, citing the unnamed official.
• The report comes days after Trade Moneta reported the head of Turkey’s central bank ruled out a total prohibition of cryptocurrencies and said a wide range of crypto regulations is coming within two weeks.
• Those comments came days before a ban on the use of cryptocurrencies for payments is due to go into effect this Friday. The announcement of the ban, which came as the use of cryptocurrencies in the nation has soared due to the plunging lira, drew protests from the government's political opponents.
• The fact is, completely prohibiting crypto in Turkey is almost impossible to do. Local media reported that in the beginning of 2021, moving in tandem with the bitcoin price run, the country’s two largest crypto exchanges, Paribu and BtcTurk, were trading over $1 billion worth of crypto daily.
• According to local reports, the total volume of crypto traded in January accounted for around 25% of the traded volume on the country’s stock exchange BIST.
• The comments also came shortly after the collapse and detention of employees of two crypto exchanges that are being investigated by the government.