Turkey’s Central Bank Bans The Use Of Cryptocurrency As A Means Of Payment

Citing the dangers, possible damages and significant risks associated with crypto payments, Turkey’s central bank bans the use of cryptocurrency and crypto assets as a medium of exchange for goods and services.

The Central Bank of Turkey in a legislation published in the Official Gazette, banned the use of cryptocurrency as a means of making payments. The apex bank said that cryptocurrency as well as other digital assets that are based on Distributed Ledger Technology (DLT) will no longer be used and accepted as a means of payment, either directly or indirectly.

Specifically the bank said “Payment service providers will not be able to develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance, and will not be able to provide any services related to such business and models”

Turkey has witnessed an astronomical boom in its crypto market and investors, before this crypto ban, hoped that they’d be able to gain from Bitcoin’s rally and shelter against inflation. One major reason for the spike in the demand of cryptocurrency in the country is a weaker Turkish Lira and the pressures that came as a result of inflation.

The apex bank in a statement explaining its reason for the sudden ban said that crypto assets were “neither subject to any regulation and supervision mechanisms nor a central regulatory authority” among other security risks.

The apex bank also said that “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”.

Last week, Turkish authorities demanded user information from trading platforms. Turkey’s annual inflation climbed more than 16 percent in the month of March.

The ban on cryptocurrency goes into effect starting from the 30^th of April.

Turkey therefore joins the list of countries like Nigeria where the use of cryptocurrency has been banned. Experts argue that crypto assets have the ability to change the digital economy of a nation but most governments like the Nigerian Government insists that cryptocurrency is mostly used to fuel terrorism and money laundering.