The Turkish central bank is to ban cryptocurrency payments from April 30th, saying that the anonymous nature of cryptocurrency brings with it a risk of “non-recoverable” losses.
The change also prohibits companies from processing transactions with cryptocurrency, according to a degree published in the official government gazette last Friday. As the central bank explained in a statement, the lack of regulation, supervision, and central regulatory authority, together with the high volatility of the market value of crypto tokens and the potential for abuse by criminals, means that they present a “significant risk” for the central bank.
The Turkish Treasury and Finance Ministry said in March that it shares the “global concern” about cryptocurrency developments. The ministry indicated it was drawing up regulations with the help of the central bank, the banking regulator, and the capital markets board.
European Central Bank President Christine Lagarde took aim at bitcoin fueling criminal activity in January. Lagarde said the cryptocurrency was enabling “funny business.” India is also set to propose a law banning cryptocurrencies and fining people for holding or trading them, according to a March report from Reuters.
The value of bitcoin soared to over $60,000 this year, increasing 111%. Ethereum, the second-largest cryptocurrency after bitcoin, jumped 225%.
Many Turkish investors cashed out foreign-exchange holdings after central bank governor Naci Agbai was removed, causing a drop in the value of Lira, according to the Dunya newspaper. Those investors put their money into equities and cryptocurrencies instead. Cryptocurrency trading volume tripled to roughly $2.8 billion between March 20-24th from roughly $1 billion in the same period last year.
Kemal Kilicdaroglu, the leader of the opposition party CHP, criticized the government for failing to discuss the ban with cryptocurrency participants before enacting it. Ozgur Guneri, the Chief Executive Officer for BTCTurk, one of the largest cryptocurrency platforms in Turkey, says the ban should have been “communicated in a better way given the level of disinformation.” Guneri believes the ban will affect electronic payment systems more than individual investors, who “won’t have a hard time making investments in digital currencies.”