Turkey’s central bank has banned citizens from using digital currencies for payments, saying that digital currencies pose great risks as they are unregulated and volatile. Digital currencies also undermine the payment methods the bank has put in place, including the national currency.
The Central Bank of the Republic of Turkey announced the new ban through the Official Gazette, prohibiting citizens from using digital currencies for payments directly or indirectly. Turkish firms are also prohibited from providing digital currency-related payment services. It termed digital currencies as risky because “they are neither subject to any regulation and supervision mechanisms nor a central regulatory authority.”
The bank stated, “Payment service providers cannot 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 cannot provide any services related to such business models.”
The ban goes against the trend by the Turkish government in which it has indicated it intends to regulate the industry. Turkey’s Ministry of Finance has also in the past year claimed that it was exploring digital currencies with other regulators in the Middle Eastern country. Most recently, the Minister for Industry and Technology revealed that he was “no longer negative towards digital currencies.”
Government officials in the country have, however, expressed concerns about some aspects of digital currencies, especially price manipulation and volatility. The tech minister pointed to the influence some personalities like Elon Musk have on BTC and other smaller currencies like Dogecoin.
“With one tweet, Elon Musk can suddenly turn the market upside down,” the minister observed last month.
According to the central bank, the risks outweigh the benefits for digital currencies.
“Their use in payments may cause non-recoverable losses for the parties to the transactions … and include elements that may undermine the confidence in methods and instruments used currently in payments,” the bank added.
The ban takes effect on April 30.
The move has been criticized in the digital currency industry and beyond. Turkey’s opposition leader Kemal Kilicdaroglu termed the move as another instance of “midnight bullying,” referring to a recent instance in which Turkey’s president fired the central bank governor at midnight.
He took to Twitter to call out the Turkish government for the retrogressive move, stating, “It’s like they have to commit foolishness at night.”
See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.