Turkey Bans Cryptocurrency Use for Payments as Local Currency Plunges

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Turkey Bans Cryptocurrency Use for Payments as Local Currency Plunges

The Central Bank of the Republic of Turkey has issued a regulation on cryptocurrencies that prohibits the use of cryptocurrencies for the payment of goods and services. As of the end of this month, crypto assets may no longer be used directly or indirectly as a means of payment in the country and no services may be offered for this purpose.

Central Bank of Turkey prohibits the use of cryptography to pay for goods and services

The Central Bank of Turkey (also known as CBRT or TCMB) has issued a regulation on the use of crypto assets in payments. It was published Friday in the official journal of the Turkish government.

The central bank also said Friday that studies have been completed on regulating the use of crypto assets in payments. TCMB wrote:

Recently, some initiatives have been taken regarding the use of these assets in payment transactions. It is assumed that their use in payment transactions may result in unrecoverable losses for the parties involved in the transactions.

The bank described how crypto assets pose significant risks to stakeholders, citing factors such as excessive volatility, lack of regulation and irrevocability of transactions. The TCGB further warned that crypto assets can be used for illegal activities due to their anonymous structure and that wallets can be stolen or used illegally without the owners’ permission.

In addition, according to the central bank, there are also elements that could undermine confidence in current payment methods and instruments.

The official notice states that the rule seeks to prohibit the use of cryptographic assets in payment transactions, directly or indirectly, in the provision of payment services and the issuance of electronic money. Note details:

Cryptographic assets may not be used directly or indirectly to make payments….. No service can be provided for the direct or indirect use of crypto assets in payment transactions.

The notice also warns that payment service providers may not develop business models that directly or indirectly use crypto assets to provide payment services and issue electronic money. Nor can they offer services related to these business models.

In addition, the central bank stated in its statement that payment and e-money institutions should not act as intermediaries on platforms that offer the trading, storage, transfer or issuance of crypto assets or the transfer of money from such platforms.

This regulation on cryptocurrencies will enter into force on April 30, 2021, the announcement said, adding that it was issued by the Governor of the Central Bank of the Republic of Turkey.

The Turkish lira has depreciated significantly over the past 12 months. The second one. In March, the exchange rate fell 16% in a single day after former central bank governor Naci Agbal was fired and replaced by Saapa Kavcioğlu, the fourth central bank governor in two years.

The sharp decline in the local currency is stimulating interest in cryptocurrencies in Turkey. The trading volume of cryptocurrencies reached 218 billion lira ($26 billion) between early February and the 24th. of March, with a jump over the weekend of Agbala’s departure, Reuters reported, citing data from U.S. blockchain data analytics firm Chainalysis. In the same period of the previous year, the trade volume was just over 7 billion liras.

What do you think about the ban on crypto payments in Turkey? Let us know your comments in the section below.

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