Turkey is not doing well economically. In March of this year, the country experienced an inflation rate of over 13%! Where a few years ago the Turkish lira was still almost equal to the euro, today one euro is worth almost 10 Turkish lira. A gigantic drop in value in a relatively short time.
It is therefore no surprise that cryptocurrencies were on the rise in Turkey. Until the Turkish financial authorities decided that cryptocurrencies should be partially banned. For example, payments with bitcoin will be banned in Turkey from the end of April.
Following this, two major Turkish exchanges fell. Thodex and Vebitcoin were no longer able to meet the demand and closed the doors. However, the Turkish central bank (CBRT) denies that the regulation has the effect of making cryptocurrencies illegal at all. The governor of the CBRT states in a Bloomberg article that the CBRT only wants to regulate the Turkish crypto industry on a large scale. Precisely to prevent another collapse of Turkish exchanges.
The CBRT has developed an interesting and quite radical plan for this. The central bank would create a new bank with the sole task of holding cryptocurrencies from local Turkish exchanges and other Turkish crypto companies. The new bank would keep the “cold wallet” of such companies, while the companies themselves would still have access to a smaller “hot wallet” in order not to hinder the operational capacity of such companies too much. This plan should prevent an exchange collapse and even exit scam from happening again.
If this plan is actually realized, this will be the first time that a national bank has been directly involved in the crypto capital of local companies. Although it has long been normal for exchanges to adhere to the regulations of the respective countries, this plan by the Turkish central bank goes a significant step further. In essence, this means that the Turkish government will get the capital of Turkish citizens. This is rightly questioned. What happens if this new bank is broken into? how is currency guaranteed to be safe?