The Central Bank of the Republic of Turkey (CBRT) on Friday introduced the Regulation on the Non-Use of Crypto Assets in Payments. The ban is due to come into force on April 30th. The bank says the decision is based on “significant risks” that such assets pose to users.
According to CBRT, these risks include a lack of regulation, excessive volatility in market value, the possibility of being used in illegal transactions, and the risk of digital wallets being stolen.
“It is believed that their use in payments may cause non-recoverable losses to the parties to the transactions due to the factors listed above, and they contain elements that may undermine confidence in the methods and instruments currently used in payments.”
The decision resulted in a sell-off in the Bitcoin market, with the benchmark cryptocurrency’s value falling by as much as 4%.
Bitcoin and other popular digital coins like Ethereum and XRP appreciated earlier this week as the Coinbase (COIN) exchange made its market debut on the NASDAQ.
The crypto market in Turkey has seen a boom in recent months as the value of the lira continues to fall and inflation surged over 16% in March. This market experienced an even bigger boom after Turkish President Tayyip Erdogan replaced the governor of the central bank in mid-March. Erdogan is pushing for lower interest rates despite the country’s extreme inflation.
The CBRT decision goes against the recent trend of digital payments becoming more mainstream. Tesla (TSLA) now allows US citizens to buy a vehicle with Bitcoin. CEO Elon Musk said overseas customers can do so later this year. And just this week, Royal Motors, which sells Rolls Royce and Lotus vehicles in Turkey, announced that it would accept digital currencies as a means of payment.
The leader of the Turkish opposition party Kemal Kilicdaroglu spoke out against the further step Twitter Ask with whom the ruling party consulted in its decision. In a follow-up TweetHe accused the country’s heads of state and government of “having no tolerance for young people”.
Ankara could soon see a company in its ban on cryptocurrencies. In its recent government agenda, India proposed laws that would create an official digital currency issued by the Reserve Bank of India and “ban all private cryptocurrencies in the country”. This ban would be more extreme and would punish those who use or even hold assets in cryptocurrencies with a fine.
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