The collapse of two major crypto exchanges in Turkey has accelerated the demand for cryptocurrency regulations in the country. In an alleged exit scam, two major Turkish crypto exchanges – Thodex and Vebitcoin – are currently under investigation by Turkish authorities.
Officials familiar with the matter told Bloomberg that following the collapse of these two exchanges, the government is looking ahead to forming a central banking custodian to eliminate any counterparty risks.
Within a week of the Turkish central bank banning the use of crypto payments, troubles started brewing at the two exchanges with massive withdrawals and trading activities at these two exchanges. Thus, the exchanges started facing troubles with their financial operations with Vebitcoin also announcing to cease all of its activities very soon.
As per the Bloomberg report, authorities are now looking to establish a capital threshold for exchanges along with other educational requirements for the executives at such firms. The official familiar with the matter told the publication that preparations for all the regulatory frameworks shall be completed in a few weeks.
Turkey’s Capital Market Board, the Treasury, the Finance Ministry, and the country’s financial crimes watchdog Masak are collectively involved in this effort.
The Brewing Troubles In Turkey’s Crypto Landscape
The roots of all the trouble in Turkey’s crypto landscape are in the country’s falling economic outlook and rising inflation. Over the last month, Bitcoin (BTC) and crypto demand in Turkey has been at its peak with the rising inflation in the country and the falling value of the Lira.
Thus, the majority of Turkish citizens moved their money to the crypto space to protect their savings resulting in massive trading volumes at local exchanges. To curtail this, the government initiated a ban on the use of crypto payments which further spoiled the matters.
The major issue erupted last Wednesday when the Instanbul-based Thodex exchange halted its trading after the company’s chief executive fled the country. Later on Friday, Vebitcoin also halted its operations citing financial crunch. Vebitcoin’s CEO Ilker Bas along with three other executives have been arrested by local authorities on Monday.
As per the report, Turkey is already adopting to take a CBDC route to protect the falling value of the Lira. Reportedly, the Turkish central bank will issue its CBDC in the next two years.