Turkish Central Bank Considers Becoming Bitcoin Custodian

Turkey’s fiat currency, the Lira , is in serious trouble – especially against Bitcoin – with consumer price inflation reaching an alarming 16% in March of this year.

While the CBRT’s governor has denied any blanket ban of crypto, according to a report published on Bloomberg and attributed to a senior government official, the CBRT is now planning to aggressively regulate the Turkish crypto industry.

Specifically, the CBRT would reportedly create a new custodial bank, intended to hold the crypto funds of local crypto exchanges and possibly other crypto companies taking user deposits.

This plan would prevent any re-occurrence of the Thodex exit scam incident, in which the company’s founder fled the country with $2 billion in user deposits… Unless a bad actor at the custodial bank enacts a similar crime.

It should be clear that the CBRT’s claim that the custodial bank will “eliminate counterparty risk” is inaccurate – the most it will achieve is to transfer counterparty risk from multiple private entities to a single public one.

The compliance costs of such regulation would likely drive up fees on Turkish exchanges but could help to prevent any repeat of the Vebitcoin collapse, which has been attributed to fraud.

Whereas its now common practice around the world for exchanges to comply with banking-style regulations and report user information and balances, having the financial authority itself hold the private keys is a new level of centralized control.

NewsBTC is a cryptocurrency news service that covers bitcoin news today, technical analysis & forecasts for bitcoin price and other altcoins.

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