Turkey Issues Ban on Crypto Use for Payments as Lira Slumps

Updated:

According to a publication in the official newspaper of the government, the Turkish central bank (CBRT or TCMB) has announced that it will be issuing strict regulations on the disuse of cryptocurrency payments in the country.

The country’s apex bank noted that “studies on the regulation regarding the disuse of crypto assets in payments have been completed.” The TCMB stated that:

“Recently, some initiatives have emerged regarding the use of these assets in payments. It is considered that their use in payments may cause non-recoverable losses for the parties to the transactions.”

The financial institution also asserted that “crypto-assets entail significant risks to the relevant parties,” noting factors like immense volatility, inadequate regulation, and irreversible transactions. The TCMB further cautioned that cryptocurrencies “may be used in illegal actions due to their anonymous structures” and “wallets can be stolen or used unlawfully without the authorization of their holders.”

Besides, the financial institution alleged that there are also “elements that may undermine the confidence in methods and instruments used currently in payments.”

The official report noted that the reason for the strong-government stance is to deter the use of crypto assets in payments within “the provision of payment services and electronic money issuance.” The notice details:

“Crypto-assets cannot be used directly or indirectly for payments … No service can be provided for direct or indirect use of crypto assets in payments.”

The press release also argued that “payment service providers cannot develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance.”

Furthermore, the notice explained that “payment and electronic money institutions cannot mediate on platforms offering trading, custody, transfer or issuance services regarding crypto assets or fund transfers from these platforms.”

According to the office of the governor of the Central Bank of the Republic of Turkey, the crypto restriction is slated to come into play on April 30.

Turkish Lira Slump Makes Cryptocurrency More Attractive for Locals
Meanwhile, the Turkish lira has plunged in value over the past twelve months, which has triggered a massive adoption of cryptocurrency in the country. Notably, the lira slumped by 16% on March 2, following the replacement of the former central bank governor Naci Agbal with Sahap Kavcioglu.

Cryptocurrency trading volume between February and March crossed 218 billion ($26 billion), according to a report by US-based blockchain data analytics firm, Chainalysis.

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.