The governor of Turkey’s central bank said Friday that the finance ministry plans to announce wide-reaching cryptocurrency regulations within two weeks. He ruled out any possibility of an outright ban.
“You can’t resolve anything simply by banning crypto, and we have no intention of doing so,” governor Şahap Kavacıoğlu said on the state-run TRT channel.
While Kavacıoğlu did not specify what the forthcoming regulation would entail, he hinted that it would clarify the legal definition of “crypto”, and govern how institutions should store crypto.
Protecting the economy
Kavacıoğlu said the implementations are necessary to address the “disturbingly high” amount of funds leaving the country through crypto. He said didn’t have any reliable figures to support his claim, but added, “we don’t even know if some of the crypto funds leaving the country ever come back.”
Beste Naz Süllü, research director at the crypto exchange Icrypex, told Decrypt that the government wants to clarify in which jurisdictions virtual currencies are stored. The key question: “Will it remain in Turkey or not?” Governments often prevent wealth from leaving their countries to protect their economies. And Turkey’s economy is struggling.
Kavacıoğlu said that his institution’s decision last week to ban payment processors (Turkish equivalents of PayPal) from dealing with crypto was necessary to restore government oversight over payments networks. Payment processors have “weak infrastructure,” he said, unlike banks, which were unaffected by the ban.
As two exchanges vanish
Kavacıoğlu’s statement comes at a critical time for crypto in Turkey. This week, two crypto exchanges, Thodex and Vebitcoin, suddenly ceased trading and prevented their customers from withdrawing money. Oğuz Evren Kılıç, a lawyer representing some of Thodex’s clients, said regulations on digital assets are long overdue to protect investors.
Such regulation could also protect the crypto industry from the barrage of bad press that has followed the shutdowns of the two exchanges, he said. “Just as the stock exchange market is protected against slander or manipulative headlines, the crypto industry could also benefit from such protection.”
But the shutdowns shouldn’t distract the government from “a rational approach,” Mehmet Türkarslan, legal counsel at a major Turkish crypto exchange, told Decrypt. “Crypto regulation, done right, could significantly contribute to the country’s economy.” And it could make the world trust Turkey’s crypto industry, said Agah Selim Sesli, senior researcher at crypto exchange Bitexten.
The new regulation, said Süllü, would likely require crypto exchanges to seek licenses and meet additional standards. That might mean some of the country’s 31 crypto exchanges would have to halt trading if they fail to meet government standards.