Turkey Cryptocurrency Exchange Bust Spurs Move for Regulation

Turkey is planning to regulate its cryptocurrency market after two local exchanges crumbled within days.

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. Authorities are also pondering a capital threshold for exchanges and education requirements for executives at such firms, the official told Bloomberg on Monday, speaking on condition of anonymity as the plans haven’t been finalized yet.

Faruk Fatih Ozer, the 27-year-old fugitive founder of Thodex, said he was a high school dropout.

Preparations for a regulatory framework may be completed in a few weeks, the official said. The Treasury & Finance Ministry, Capital Markets Board and financial crimes watchdog Masak are involved in the effort.

The ministry declined to comment.

Cryptocurrency has drawn in legions of Turkish citizens seeking to protect savings threatened by price instability and a weak currency. The daily volume of trade in Turkish crypto markets over the past 24 hours was about $1.6 billion, according to CoinGecko.com, which tracks data on price, volume and market value on crypto markets.

The turmoil began last Wednesday when Istanbul-based Thodex halted trading and its chief executive fled the country, setting off a manhunt. Vebitcoin, based on the southwestern city of Mugla, halted operations on Friday, citing worsening financial conditions. Ilker Bas, its chief executive officer, and three other employees were formally arrested on Monday, state-run Anadolu news agency reported.

©2021 Bloomberg L.P.

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