CustodyMarketsregulationTurkey

Report: Turkey To Establish Custodian Bank For Bitcoin Exchanges

The Turkish government reportedly plans to serve as a custodian for local cryptocurrency exchanges, potentially holding bitcoin for users.

Following the collapse of two local cryptocurrency exchanges and new regulations banning cryptocurrency-based payment services, the Turkish government is now reportedly planning to institute new measures to serve as a custody middleman for cryptocurrency investors.

“The government is planning to establish a central custodian bank to eliminate counterparty risk following the collapse of the Thodex and Vebitcoin exchanges last week, according to a senior official familiar with the plans,” Bloomberg reported. “Authorities are also pondering a capital threshold for exchanges and education requirements for executives at such firms.”

Earlier this month, Turkey instituted a ban on all cryptocurrency payment services, as its own fiat currency, the lira, continues to be devalued. Then, the CEO of local cryptocurrency exchange Thodex fled the country, leaving user funds irretrievable. Days later, local cryptocurrency exchange Vebitcoin ceased all activities.

The plans are reportedly unfinalized, at least weeks away from being implemented and there were no details about how the rules would apply to bitcoin custody specifically. But presumably the world’s leading cryptocurrency would be included.

The implications of a central bank serving as a custodian for bitcoin exchanges are unprecedented. Bitcoin was designed as a financial vehicle that circumvents the policies and practices of central banks. By controlling the private keys for any bitcoin purchased on a Turkish exchange, the country’s central bank would ultimately have power over those funds. Only if users were to fully withdraw their bitcoin from the exchange, and therefore take control of the private keys from this custodian, could they really control an asset free from government oversight.

Article First Published on Bitcoin Magazine

Related posts
Alex Gladsteinfed watchMarketsPetrodollarpodcastVideo

Petrodollar Deep Dive With Alex Gladstein

Alex Gladstein joined “Fed Watch” to discuss his recent article about the petrodollar and lessons for Bitcoin’s growing monetary role. Watch This Episode On YouTube Listen To This Episode: Apple Spotify Google Libsyn Overcast In this episode of Bitcoin Magazine’s…
Arthur HayesBitmexBusinessregulation

BitMEX Executives Trial Set For March 2022

The former executives of bitcoin derivatives platform BitMEX face trial over money laundering charges next year. The former executives of leading bitcoin derivatives platform BitMEX are set to have their day in court. Former CEO Arthur Hayes, cofounder Benjamin Delo…
CultureLawsuitregulationRoss UlbrichtSilk Road

Ross Ulbricht Sues Federal Government, Alleges Religious Rights Are Being Violated In Prison

Ross Ulbricht, founder of Bitcoin darknet marketplace Silk Road, is suing over the right to communicate with his father. Ross Ulbricht, the convicted founder of massive darknet marketplace Silk Road, filed a federal lawsuit last week accusing the Federal Bureau…