Turkey to Ban Cryptocurrency Payments to Avoid Financial Crime

  • Richard Marley
  • April 19, 2021
  • 3 minutes read
  • 239

The Central Bank of Turkey is to ban the use of cryptocurrency payments by 30th April. This initiative is taken as a part of the country’s regime to regulate the cryptocurrency sector that is gaining uncontrollable popularity in recent months. 

The Turkish government has been closely monitoring cryptocurrencies for some time now and they are concerned that the terrorists can use these to fund illicit activities or it might assist in facilitating money laundering.

“Their use in payments may cause irreparable damages for the parties to the transactions, and include elements that may undermine the confidence in methods and instruments used currently in payments,” the bank said.

However, this legislative announcement has lowered the value of Bitcoin up to 4%. Other than banning crypto payments for purchasing goods and services, the new regulations have also banned the exchanging of money to crypto platforms through fintech systems. Many investors and experts in Turkey see Bitcoin as support against inflation since Lira faces serious devaluation against foreign currencies because of the country’s financial volatility.

The booming crypto businesses have replaced the gold and real-estate businesses as a shield against the increasing interest rates and the struggling lira. The new virtual currency is mostly used by the younger generation with more knowledge of the growing digital world in hopes to protect their livelihood against the latest economic troubles of the country.

The government’s ban on crypto payments ban has angered domestic investors. The main opposition party of the country, the Peoples’ Republican Party (CHP), also criticised the government over such a decision.

“Rather than issuing a midnight legislation, you should have decided on such sensitive issues after consulting all relevant parties,” CHP leader Kemal Kilicdaroglu said.

The government was all set to implement a Central Bank Digital Currency in line with its 11th Development Plan. This central bank was to be based on all blockchain and crypto technologies.

Dr Mehmet Bedii Kaya, an expert of IT law, “On the other hand, there is a significant number of Turkish citizens who use cryptocurrencies for short and long-term gains. I think that this latest regulation has been prepared with a quick reflex, without considering the potential financial losses it might generate with the wave of resulting misinformation.”