Technology

Turkey bans cryptocurrency payments due to risk involved, affecting bitcoin price

In legislation published in the Official Gazette on Friday, the central bank said cryptocurrencies and other such digital assets based on distributed ledger technology cannot be used, directly or indirectly, as a payment instrument.

Turkey’s growing crypto market has gained momentum in recent months as investors joined a global bitcoin rally seeking to hedge against the depreciation of the lira and inflation, which topped 16% on the month. latest

Bitcoin was down nearly 3% to $ 61,490 against the dollar at 0754 GMT after the Turkish ban, which was criticized by the main opposition party.

In a statement, the central bank said the cryptoassets were “not subject to any regulatory and supervisory mechanism or a central regulatory authority,” among other security risks.

“Payment service providers will not be able to develop business models in which cryptoassets are used directly or indirectly in the provision of payment services and the issuance of electronic money.” service, she added.

“Their use in payments may result in unrecoverable losses for parties to transactions (…) and include elements that may undermine confidence in the methods and instruments currently used in payments,” added the central bank.

This week, Royal Motors, which distributes Rolls-Royce and Lotus cars in Turkey, became the first in the country to say it would accept payments in cryptocurrency. Gloves like Apple, Amazon and Expedia also accept such payments globally.

BULLYING

The main opposition leader, Kemal Kilicdaroglu, has called the move another case of “midnight bullying”, referring to President Tayyip Erdogan’s decision last month – announced in a midnight decree – to fire the governor of the central bank.

“It’s like they have to do something stupid at night,” he said on Twitter.

Turkish annual inflation is at its highest for six months, 16.19%, well above a target of 5%, and unemployment remains high at 13.4%.

Cryptocurrency trading volumes in Turkey reached Lira 218 billion ($ 27 billion) from early February to March 24, compared to just over Lira 7 billion in the same period a year earlier, according to reports. data from American researcher Chainalysis analyzed by Reuters

Lira 23 billion worth of cryptocurrencies were traded in the early days after Erdogan shocked the markets by inviting the central bank chief last month, data show, up from Lira 1 billion on the whole of March 2020

Turkish authorities last week demanded information on users of crypto trading platforms.

“Any authority that begins to regulate (the market) with a ban will end up being frustrated (since it) encourages fintech startups to move abroad,” economist Ugur Gurses said on Twitter.

The legislation comes into force on April 30

($ 1 = 8.0800 lire)

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