Bitcoin tumbled more than four percent on Friday after Turkey’s central bank banned the use of cryptocurrencies and cryptocurrencies for purchases, citing possible ‘irreparable’ damage and transaction risks.
In legislation published in the Official Gazette, the central bank said that cryptocurrencies and other digital assets based on distributed ledger technology could not be used directly or indirectly to pay for goods and services.
The decision could stop Turkey’s crypto market, which has gained momentum over the past few months as investors joined the global meeting in Bitcoin, and try to protect against lira depreciation and inflation, which was 16 percent higher last month.
Bitcoin fell 4.6 percent to $ 60,333 GMT at 11:17 GMT, which was criticized by Turkey’s largest opposition party. Smaller coins Ethereum and XRP, which tend to move with Bitcoin, have fallen between 6 and 12 percent.
In a statement, the central bank said that crypto-assets “are not subject to any regulatory and supervisory mechanisms or a central regulatory authority”, including security risks.
“Payment service providers will not be able to develop business models in such a way that cryptocurrencies are used directly or indirectly in the provision of payment services and the issuance of electronic money” and will not provide any services.
“Its use in payments may not result in recoverable losses to the parties to the transactions … and it contains elements that could undermine confidence in the methods and instruments currently used in payments,” the central bank added.
This week, Royal Motors, which distributes Rolls-Royce and Lotus cars in Turkey, became the first company in the country to accept payments in cryptocurrencies.
Cryptocurrencies continue to be little used for trading, although they are becoming increasingly common global assets, although companies such as Tesla Inc and the travel website Expedia Group Inc accept such payments.
Difficult regulatory entanglement of cryptocurrencies by large economies was relatively rare, and most sought to explain rules rather than prevent use. Traders say such bans are difficult to enforce, and crypto markets have shaken off such movements in the past.
Turkey’s main opposition leader, Kemal Kilicdaroglu, described the ruling as another ‘midnight bullying’ case, citing President Recep Tayyip Erdogan’s decision last month – announced in a midnight decision – to remove the governor from the central bank. to thank.
“It’s like they have to commit stupidity at night,” he said on Twitter.
The legislation will come into force on 30 April.
This is the first of all, the most popular of all. It is the most beautiful thing that ever happened to me. Böyle kararlar verilmeden önce tüm paydaşlarla konuşulur. #Crypto kararını kime danıştın ey iktidar? Bu konunun tüm paydaşları ile oturup, istişarelerde bulunacagim.
– Kemal Kılıçdaroğlu (@kilicdarogluk) 16 April 2021
Heavy hand
Crypto-trading volumes in Turkey reached 218 billion lira ($ 27 billion) from early February to 24 March, compared to just over 7 billion lira in the same period a year earlier, according to data from US researcher Chainalysis analyzed by Reuters .
Trade increased in the days after Erdogan replaced the bank governor, dropping the lira to 15 percent.
Last week, Turkish authorities demanded user information from crypto-trading platforms.
“Any authority that starts regulating [the market] with a ban will end up frustrated [since this] encourages fintech companies to move abroad, ”said economist Ugur Gurses.
In one of the strictest policies in the world, India will propose a ban on cryptocurrencies and fines for those who trade or hold the assets. China banned such trade in 2017 and put the brakes on a freewheeling emerging crypto industry.
“Headlines like this at this point tend to send a bolt across the bow,” said Joseph Edwards, head of research at crypto-brokerage Enigma Securities in London, noting that similar regulatory movements in Nigeria and India needle does not move. ”.
Ahmed Faruk Karsli, CEO of Turkish payment systems firm Papara, said the ban on transferring money to cryptocurrency platforms via fintech systems was unexpected.
“It’s much easier to choose to ban than to deal with this financial technology,” he told Ekoturk TV.
“It’s a regulation that worries me about my country.”