Turkey Bans Crypto Payments Amid Currency Crisis
Everyone is talking about Dogecoin spikes 400% in a week, stoking fears of a cryptocurrency bubble, but I'm more interested in the fact that
Turkey's crypto ban is to take effect April 30. You heard that right, Turkey is currently in a currency crisis so they announced a ban on cryptocurrencies as a means of payment earlier this morning.
I have been following the currency crisis since mid-march when the value of the Turkish lira fell 15% after President Recep Tayyip Erdogan sacked the governor of the country's central bank. At this point the the Turkish lira appears to be recovering a bit after having been hit hard by the effects of the coronavirus pandemic and rising consumer prices. The central bank decided yesterday to hold its main interest rate at 19%... Now they are banning crypto because people are looking for alternative payment methods as the lira looses purchasing power.
The Central Bank of the Republic of Turkey released the ban in a press release titled the “Regulation on the Disuse of Crypto Assets in Payments.”
“It is considered that their use [crypto assets] 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,” Source
The risks they highlighted were:
- they are neither subject to any regulation and supervision mechanisms nor a central regulatory authority,
- their market values can be excessively volatile,
- they may be used in illegal actions due to their anonymous structures,
- wallets can be stolen or used unlawfully without the authorization of their holders, and
- transactions are irrevocable.
First most of these negatives are good for people bad for governments with hyper inflation. The point about illegal activity is just false based on some of the info I found for one of my recent post Janet Yellen and Crypto Fear mongers Get Pushback From Former CIA Director
At this time Bitcoin has from $63,000, but is trading back to $62,000. The weakness might be cause by Turkey’s decision as it could set a bad precedent for other crisis-riddled countries struggling to protect their currencies, but I'm still a bit skeptical that its actually the main cause for the drop.
Many have warned that such bans could drastically impact the markets and I think that thesis could be true, but I also don't think many governments have the ability to restrict users. They may ban crypto, but it's easy to get around these bans.
Crypto proponents have long argued that bitcoin and other transactional currencies like xrp, ltc and algo are a better means of payments and I agree. We will have to see how this actually impacts the global crypto market and see if it sets off a chain of bans, but I don't think it will.
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