Turkish Government Bans Crypto as a Payment Method
Turkish Central Bank Expresses Concerns About Lack of Regulation
Turkey is banning the use of cryptocurrency as a payment method, pointing to volatility and the potential for it to be used for illicit activities. With Turkey’s economy suffering and the value of its currency falling, some locals have been trading their currency for crypto.
Turkey’s central bank pointed to the lack of regulation as another reason to ban cryptocurrency usage for payments in the country. Virtual coins, which are out of the purview of central banks, are being viewed as a threat to the currencies issued by governments.
There are roughly 2.4 million cryptocurrency holders in Turkey, with bitcoin being the most popular virtual coin. Most crypto users in Turkey buy bitcoin as an investment rather than to make payments. Daily trends may not change significantly because of the ban, but it is still somewhat concerning for cryptocurrency investors.
Crypto Prices Spike
The Turkish government’s decision comes as bitcoin and other virtual coins are rallying. Bitcoin, ether, and dogecoin set record highs last week, buoyed by Coinbase’s (COIN) $86 billion IPO.
Since the pandemic began, individuals around the world have been buying and selling cryptocurrencies at an increasing rate. This has resulted in bitcoin prices more than doubling.
Meanwhile, the Turkish economy is facing hardships. People are also pouring money into crypto into gold and foreign currencies. The government is urging the public to invest that money back into the local economy.
Turkey Wants More Oversight of Crypto Transactions
Turkey’s new regulation prevents payment companies from sending money to cryptocurrency exchanges, which means users must rely on banks for their transactions. Through these measures, the Turkish government hopes to have more oversight of crypto transactions. But this may prove difficult.
Bitcoin transactions are between two people, without central bank intervention. That makes it hard for governments to track transactions other than when bitcoin is converted into lira. Critics say the new policy will reduce the use cases for cryptocurrency and will drive transactions underground, ultimately limiting the government’s access to information about crypto transactions.
The ban goes into effect on April 30. Crypto enthusiasts and sceptics around the world will be eager to see what impact the decision will have on Turkey’s economy and on the global crypto market.
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