Reuters: Turkey bans cryptocurrency payments, limits Bitcoin usage

The Central Bank of Turkey has prohibited the use of cryptocurrencies and digital assets based on distributed ledger technology for purchasing goods or services, citing potential "irreparable" harm and significant risks.

According to a report by Reuters, the Central Bank of Turkey (CBRT) stated yesterday that cryptocurrencies and digital assets based on distributed ledger technology cannot be used directly or indirectly as a means of payment.

The Central Bank of Turkey stated:

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Payment service providers will not be able to develop direct or indirect payment services based on cryptocurrencies, issue electronic money, or provide any business services based on this model.

The ban states that cryptocurrencies are not regulated by supervisory authorities and pose other security risks, which could potentially cause irreparable losses to both parties involved in the payment. This ban will come into effect on April 30.

Turkish Lira Experiences Severe Depreciation

Over the past five years, the Turkish currency Lira has been steadily depreciating against the US dollar, reaching a high of 0.35 and a low of 0.12, shrinking by nearly one-third. It is currently at its lowest point. It is reported that the weak currency and inflation pressure have driven local demand for cryptocurrencies.

According to previous surveys, the Turkish people have one of the highest rates of cryptocurrency ownership globally. Data analysis company Statistica's 2019 Global Consumer Survey Report showed that approximately 20% of the Turkish population are cryptocurrency holders.

Plans for Central Bank Digital Currency in 2019

In July 2019, the Turkish government released the Central Bank's economic roadmap for 2019 to 2023, which included plans for issuing a Central Bank Digital Currency (CBDC) supported by blockchain technology. The development plan also outlined the adoption of blockchain in transportation and customs operations, and highlighted how emerging technologies such as big data, artificial intelligence, and blockchain could enhance public services and management.

However, some officials in the government remain skeptical of cryptocurrencies, with some ministers even comparing such projects to Ponzi schemes.