Crypto Payments Banned In Turkey Due To Cited Risks

The central bank of Turkey has officially banned the use of crypto and other crypto assets for the use of payments for services and goods. The reason for this has been cited as “irreparable” potential damage as well as significant risks regarding transactions.

Another Crypto Payment Ban

This legislation was published in the Official Gazette on Friday. There, the Turkish central bank declared that any and all cryptocurrencies, including digital assets based on distributed ledger technology (DLT) are expressly forbidden as a means of payment, directly or indirectly.

Throughout these past few months, Turkey has seen an ever-growing crypto market, one that has only gained momentum thanks to the global Bitcoin rally. One of the key drivers in this spike in crypto adoption is the attempt to hedge against the Turkish Lira, which saw a 16% inflation just last month. Interestingly enough, this announcement could have resulted in Bitcoin seeing a negative price action. The asset was trading at 3% less than it was, going at $61,490 at around 07:54 GMT after the Turkish ban was announced. As one would imagine, the main opposition party within the country came out with strong criticisms about this move.

The Reasons Why

In the statement banning crypto payments, the Turkish central bank declared that crypto assets weren’t subject to any form of supervision mechanism, central regulator authority, or any other form of regulation. As a result, the asset posed a risk, according to the bank.

The central bank went further, declaring that payment service providers would be incapable of developing various business models that would allow crypto assets to be used in payment services or electronic money issuance, either directly or indirectly. No crypto payment service is to be allowed

The bank went further, explained that non-recoverable losses for the transactions’ parties could occur through the use of crypto as payments. Another cited reason is that crypto payments incorporate elements that possibly undermine the confidence of the current instruments and methods used for payments already. In other words, Turkey’s central bank isn’t keen to see what happens to the Lira if people can just use crypto payments from the start.

One Of Many Criticisms

Kemal Kilicdaroglu stands as the leader of the main opposition party, and declared this decision to be yet another case of what he calls “midnight bullying.” This comes in reference to the decision made last month by Tayyip Erdogan, the President of Turkey. This decision, announced within a midnight decree, fired the Governor of the Central bank. Kilicdaroglu declared on Twitter that it’s like the opposition party is mandated to “commit foolishness” at nighttime.