Turkey Bans the Use of Cryptocurrencies as a Form of Payment

The Central Bank of Turkey has initiated a ban on the use of cryptocurrencies as a form of payment. However, the new regulations do not prevent its citizens from holding them.

Turkey Going to Ban Cryptocurrencies as a Form of Payment

Turkish central bank has announced a ban on the use of cryptocurrencies as a form of payment effective from April 30. Reportedly, the citizens of Turkey will be able to hold the cryptocurrencies, but not use them.

Under the new regulation, Turkish citizens won’t be able to use cryptocurrencies to pay for goods and services. The regulation further stops cryptocurrency exchanges from operating in Turkey.

This means payment service providers will no longer be allowed to offer customers any products that are linked to cryptocurrencies nor allow them as a payment option.

In a statement, the central bank said crypto-assets were “neither subject to any regulation and supervision mechanisms nor a central regulatory authority” among other security risks, adding:

“It is considered that their use in payments may cause non-recoverable losses for the parties to the transactions due to the above-listed factors and they include elements that may undermine the confidence in methods and instruments used currently in payments.”

The central bank cited a lack of regulatory authority, high volatility, the use of cryptocurrencies to fund illegal activities, crypto wallets being unlawfully used, and the irrevocable nature of transactions as reasons for the ban.

Turkey’s Growing Cryptocurrency Usage

Turkey’s cryptocurrency market has gained significant momentum in recent months as investors are flocking towards Bitcoin as a hedge against lira depreciation and inflation that saw a rate of 16% last month.

Turkey’s cryptocurrency trading volumes have hit 218 billion lira or $27 billion from early February to 24 March, up from just over 7 billion lira in the same period a year earlier, according to data from Chainalysis.

The country accounts rank 29th out of the 154 countries on Chainalysis’ Global Crypto Adoption Index and number one in the Middle East.