Turkey plans to have custodian bank for Bitcoin exchanges

The Turkish government wants control of Bitcoin.

Such a statement will be true if plans to institute measures to serve as custody middleman to cryptocurrency investors by the government of Turkey will be finalized and put into action.

The move comes after the collapse of two local cryptocurrency exchanges and the imposition of new regulations that will ban digital currency payment services.

According to Bloomberg, a senior official who has knowledge of the plan said, “the government is planning to establish a central custodian bank to eliminate counterparty risk following the collapse of Thodex and Vebitcoin exchanges last week.”

The official also said that the capital threshold for exchanges and education requirements for executives at such companies are being pondered upon by authorities.

What this means for Bitcoin

A central bank acting as a custodian for Bitcoin (BTC) exchanges can be a huge game-changer for the cryptocurrency.

The virtual currency was designed along with the principle for it to act as a financial vehicle that goes around the policies and practices of central banks.

The plan of the Turkey government would give them the private keys for any Bitcoin purchased on a Turkish exchange. Ultimately, it would also mean that the country’s central bank will have power over those funds.

A control free from government oversight can then be only achieved if a user fully withdraws their Bitcoin from the exchange to take control of the private keys from the custodian.

Desperate times, desperate measures

After what the crypto industry in Turkey has gone through for the past few days, the government seems to be in a desperate state to enforce the regulation.

Earlier this month, due to the continued decline in the value of Turkey’s fiat currency, lira, the government decided to ban all cryptocurrency payments. Just last week, the CEO of Thodex fled, leaving users unable to access their funds, and few days after that, Vebitcoin halted its operations, and some of its employees were detained.

The plan to be a custody middleman seems to be a last-ditch effort for the country to put a firm chokehold on Bitcoin after the unfortunate events involving the crypto exchanges.

 

Image courtesy of Cointelegraph News/YouTube

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