What is the significance behind the former senior officials of the Turkish Central Bank and Banking Regulation and Supervision Agency joining CoinTR?

Author: Web3 Whistleblower

Recently, boosted by the anticipation of the upcoming Bitcoin ETF, the crypto market has entered a new wave of upward momentum, with Bitcoin's price breaking through $35,000 for the first time since May 2022, giving everyone a glimpse of the dawn of a bull market. Amid this hot market trend, positive news from the industry has been pouring in, and one piece of news deserves our special attention.

Former Turkish Regulatory Officials Take Charge of Crypto Exchange CoinTR

On October 24, the crypto exchange CoinTR officially announced that five senior officials from the Turkish Central Bank, the Turkish Ministry of Treasury and Finance, and the Turkish Banking Regulation and Supervision Agency have joined, taking on key roles such as CEO, Chairman of the Board, Directors, and Chief Compliance Officer, fully responsible for CoinTR's compliance and global development.

Image Source: CoinTR

According to CoinTR's announcement, the incoming Chairman of the Board, Şakir Ercan GÜL, previously served as the Deputy Minister of the Turkish Ministry of Treasury and Finance and the former Chairman of the Turkish Deposit Insurance Fund. During his tenure at the Ministry, he was dedicated to advancing legislation related to cryptocurrency trading, which has somewhat accelerated Turkey's crypto compliance process. The new CEO of CoinTR will be Ali Eselioglu, the former Deputy Director of the Market Supervision Department of the Turkish Central Bank, who just stepped down from the central bank a week ago. The new Chief Compliance Officer will be Yakup DEMİR, who previously headed the Licensing and Authorization Office of the Banking Regulation and Supervision Agency (BDDK) and was the former Deputy Director of the Turkish Banking Regulation and Supervision Agency.

Additionally, Ergün AKINCI, the former Chairman of Deutsche Bank's Turkish branch and current Chief Advisor to the Turkish Central Bank, along with Mehmet Emin KARAAĞAÇ, the former Deputy President of the Turkish state-owned Vakiflar Bank, will also serve as Directors of CoinTR. It has been verified that the Istanbul Trade Registry Office has officially announced the formal effectiveness of these board changes at CoinTR.

In fact, the joining of former government officials in cryptocurrency exchanges is not uncommon in the industry. As early as 2021, Binance announced the appointment of prominent U.S. politician Max Baucus as a policy and government relations advisor. In May of the same year, Coinbase also announced the formal appointment of former White House official Faryar Shirzad as Chief Policy Officer. However, the collective joining of high-level officials from the Turkish Central Bank and Banking Regulation and Supervision Agency at CoinTR is unprecedented globally, raising questions about whether this represents the Turkish government's latest official stance on the cryptocurrency industry.

Proactively Embracing Cryptocurrency—The Optimal Choice in Turkey's High-Inflation Economy

Since August 2008, Turkey's fiat currency, the lira, has been in a continuous depreciation state. Although the Turkish government has launched a series of emergency measures to stabilize the lira's exchange rate, the lira still lacks a policy foundation for value preservation and appreciation in the medium to long term. As of now, its decline has exceeded 95%.

Data Source: https://www.google.com/finance/quote/TRY-USD

In the challenging economic situation, many Turkish citizens, facing the potential fear of "wealth evaporation" from holding their local currency, have been actively seeking reliable investment channels. Unlike the demand for U.S. dollars and euros during the currency crises of 2001 and 2018, with the soaring market capitalization of the global crypto market in recent years, cryptocurrencies have become a new hedge for many Turks to preserve their assets.

According to the "2023 Cryptocurrency Geography Report" released by Chainalysis, from July 2022 to June 2023, the on-chain transaction value in the Middle East and North Africa region was approximately $389.8 billion, accounting for nearly 7.2% of global trading volume, with Turkey's trading volume dominating this figure.

Image Source: Chainalysis

Since the Turkish financial market faced a "triple kill" of currency, bonds, and stocks in mid-December 2021, the Turkish Central Bank imposed restrictions on residents exchanging foreign currencies like dollars and euros to prevent uncontrolled depreciation of the lira. In recent years, the Turkish public has actively focused on and purchased Bitcoin and other cryptocurrencies, leading to a continuous expansion of the overall trading scale of Turkey's crypto market, with the lira continually flowing into centralized exchanges. Data analysis company Kaiko tweeted on the 18th of this month that the Turkish lira has become the most popular fiat currency trading pair on the world's largest crypto exchange, Binance, accounting for 81% of its fiat trading, compared to just 8% in 2021.

Although the Turkish government and regulatory authorities have been aware of the regulatory gaps in the crypto market, especially regarding cryptocurrency exchanges, decisions that go against the trend often lead to poor outcomes. In April 2021, the Central Bank of the Republic of Turkey (CBRT) announced that it would prohibit the use of cryptocurrencies for payments for goods and services starting April 30, and the Turkish financial regulatory authority required Bitcoin trading platforms operating in the country to provide user account and fund information to the government. This sparked concerns about tightening regulations, leading to a massive withdrawal of crypto investment funds, ultimately resulting in the collapse of Thodex and Vebitcoin, wiping out the wealth of many investors, including students and workers.

As quoted in a Financial Times report, a cryptocurrency trader stated, "The government should not seek to regulate digital assets but should study the fundamental reasons for their appeal. Why are people interested in cryptocurrencies? Why are they willing to take this risk? … When there is no stability, people look for alternative solutions."

Against the backdrop of "Erdoganomics" and the Islamic financial principle of low-interest rate preference, Turkey's extremely loose monetary policy is unlikely to change in the short term. However, in the long run, the Turkish people urgently need a suitable "channel" to win the "wealth defense battle" against the plummeting exchange rate. Therefore, proactively embracing cryptocurrencies, appointing senior officials with government or regulatory backgrounds to manage and support a stable "state-owned" crypto exchange, and continuously optimizing the local cryptocurrency trading market environment through decision-making interventions may be the optimal choice for Turkey's high-inflation economy.

Why Choose CoinTR? Localization, Technical Advantages, and Compliance May Be Key

As one of the fastest-growing countries in the global crypto market and with the most active market participants, Turkey has attracted globally renowned exchanges such as Binance, Coinbase, OKX, and KuCoin in recent years, and has birthed local exchanges like BtcTurk, Paribu, Koinim, and Bitlo.

Compared to these platforms, CoinTR, established in 2022, is relatively "young," with a shorter operational history and seemingly fewer achievements since its inception. However, this inconspicuous exchange has attracted a collective of former senior officials from the Turkish Ministry of Treasury and Finance, including Şakir Ercan GÜL and Ali Eselioglu. From this perspective, CoinTR is not an ordinary exchange.

Unlike centralized platforms like Binance, KuCoin, and OKX that operate in multiple countries and regions globally, and Coinbase, which focuses on the U.S. market, CoinTR is headquartered in Istanbul and is a local exchange rooted in Turkey. Therefore, in terms of market access, CoinTR is more likely to gain the trust of regulatory authorities and faces fewer obstacles when conducting local business compared to the aforementioned exchanges.

On the other hand, CoinTR's product technology team has a strong industry background, providing a clear technical advantage over local exchanges like BtcTurk and Paribu. According to its CEO, Ali Eselioglu, "CoinTR has invited core product technology and wallet security teams, including former Vice Presidents of Huobi Group, former heads of platform development, back-end development, front-end development, and wallet teams, to join the company. 90% of the product technology team comes from the top three exchanges globally, and 80% of the business team has over four years of industry experience. CoinTR possesses globally leading product technology capabilities."

In terms of compliance, CoinTR has obtained registration approval from Turkey's Financial Crimes Investigation Board (MASAK) and has collaborated with two state-owned banks, Ziraat Bank and Vakif Bank, to open fiat deposit and withdrawal channels. In Turkey's 2023 compliance annual review, CoinTR is one of the few compliant exchanges that fully meet regulatory requirements.

As a major economic power in the Middle East and a member of the G20, Turkey has become an important emerging market country globally. However, since 2017, it has faced increasingly severe issues such as high inflation, high unemployment rates, and persistent current account deficits, leading to significant fluctuations in its financial markets and posing risks to regional and global financial stability.

Nevertheless, this unstable domestic market environment also provides fertile ground for the development of its new financial system. As the new Chairman of CoinTR, Şakir Ercan GÜL, stated, "Driven by the macroeconomic environment and the growing public interest in innovative technologies, Turkey has become one of the most active countries in cryptocurrency and Web3, with nearly ten million crypto users, making it one of the countries with the highest digital asset penetration globally."

The collective joining of former high-level officials from the Turkish Central Bank and Banking Regulation and Supervision Agency at the crypto exchange CoinTR may represent a new attempt by Turkish authorities to address the growing domestic demand for cryptocurrency investments and to tackle the ongoing depreciation of the Turkish lira. In the future, with the continuous development of compliant crypto exchanges like CoinTR, Turkey may create new economic growth momentum and potentially transform Istanbul into another Web3 digital economy trade hub spanning Eurasia, comparable to Singapore and Hong Kong.