The Central Bank of the Republic of Turkey (CBRT) posted a press release regarding the ban on cryptocurrency payments, which leads to the price of Bitcoin dropping by more than 5% after the news got out.
According to the press release, the central bank believes that crypto assets pose a significant level of risks to certain parties due to the reasons stated as follow:
- they are neither bound to any regulation and supervision, nor a central regulatory authority,
- the market values of crypto assets can be overly volatile,
- their potential for anonymity can be misused in unlawful activities,
- the wallets can be stolen or used in illegal situations without the permission of their holders,
- the transactions are irreversible.
This could seriously dampen Turkey’s crypto market, just when it was gaining momentum in the previous months during the global rally in bitcoin, as the investors aim to hedge against lira depreciation and inflation that surpassed 16% in March.
Meanwhile, other cryptocurrencies like Ether and XRP — typically moving in tandem with bitcoin — decreased between 6 – 12%.
Kemal Kilicdaroglu, Turkey’s main opposition leader, said that the decision to ban cryptocurrency is another case of “midnight bullying” — a reference to President Tayyip Erdogan making an announcement during midnight that the central bank governor would be fired.
The new legislation goes into effect on April 30, 2021.