Turkey’s central bank has banned the use of cryptocurrencies and crypto assets to buy goods and services, mentioning possible “irreparable” losses and significant risks in such transactions.
In a law published, the Central Bank of Turkey stated that cryptocurrencies and other such digital assets based on similar technology will not be used, directly or indirectly, as a means to an end payment.
“Payment service providers won’t be able to develop business models in such a way that encrypted assets are managed directly or indirectly in the provision of electronic payment and issuance services and will not be able to deliver services related to such business models”, said the bank.
An increasing boom was observed in the cryptocurrency market in Turkey, with investors hoping to profit from the bitcoin rally and save what they can from losses due to inflation. A weaker Turkish lira and inflationary pressures have also boosted demand for cryptocurrencies.
In a statement explaining the reason behind the ban, the bank said the assets “are not subject to any regulatory or supervisory mechanism or central regulatory authority”, among other security risks. “Their use in payments is thought to cause irreversible losses for stakeholders due to the above factors and may include elements that may undermine confidence in the methods and instruments currently used in payments,” the central bank said in a statement.
Last week, Turkish authorities requested user data from trading platforms. Turkey’s annual inflation rose more than 16% in March. The relevant legislation goes into effect on April 30th. After the news, Bitcoin lost 2.59% to $61.757.