May 16, 2021

Turkey bans the use of cryptocurrencies in payments

The Turkish Central Bank prohibited the use of currencies and crypto assets in the purchase of goods and services, pointing to potential “irreparable” damages and great risks in those transactions.

In the legislation published in the Official Gazette early Friday, Turkey’s central bank said that cryptocurrencies and other digital assets based on distributed ledger technology could not be used, directly or indirectly, as a payment tool.

The bank said, “Payment service providers will not be able to develop business models in a way in which encrypted assets are used, directly or indirectly, in providing payment services and issuing electronic funds, and they will not be able to provide any services related to these business models.”

A growing boom in the cryptocurrency market in Turkey has gained more momentum recently, as investors hope to profit from a bitcoin rally and hedge against inflation.

The weakness of the Turkish lira and inflationary pressures also drove the demand for the cryptocurrency.

In a statement explaining the reason behind the ban, the bank said the assets “are not subject to any regulatory or supervisory mechanisms nor to a central regulatory authority.”

Last week, Turkish authorities requested user-related information from trading platforms.

Annual inflation in Turkey rose to more than 16 percent in March.

The legislation takes effect on April 30. Bitcoin fell 2.59 percent to $ 61,757 by 0557 GMT.

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