Turkey bans Bitcoin and other cryptocurrencies

The nation’s central bank says digital currencies have a lack of central oversight and high risk of fraud

Turkey’s central bank has issued a ban on the use of cryptocurrencies and other crypto assets for purchasing goods and services, including Bitcoin.

The Central Bank of Turkey published legislation declaring that cryptocurrencies and other digital assets based on distributed ledger technology can’t be used as payment instruments from 30 April, adding that it believes digital tokens may cause irreparable damage and pose a significant risk to both parties in any transaction, according to Reuters.

“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 models," the bank said.

It added there were security risks to using Bitcoin, specifically that these assets weren’t subject to any regulation or supervisory mechanisms, and no central regulator retained oversight over them. As such, using them for payments may lead to non-recoverable losses for the parties involved.

This move goes against the momentum that Bitcoin has gathered in recent months, which comprises a surge in valuation running parallel to a host of companies adding support for cryptocurrencies on their platforms.

PayPal, for example, has recently allowed customers not only to store digital assets in their online wallets but to use cryptocurrencies like Bitcoin to pay for goods and services.

Visa, too, has added support for cryptocurrencies, with customers now allowed to settle transactions using USD Coin, a stablecoin tied to the US Dollar.

However, much like how Mastercard has handled cryptocurrency adoption, there are no suggestions that Visa will support digital assets like Bitcoin due to the fact their value fluctuates so frequently.

For instance, in the wake of news that Turkey has effectively banned Bitcoin and other digital assets, the value of Bitcoin dipped from a high of roughly $63,000 to a little over $60,000 within a few hours.

Prior to the ban being announced, Turkey enjoyed a surging crypto market, with investors hoping to not only profit from Bitcoin’s price rise but also to avoid sky-high inflation rates. These were as high as 16% in March.

Turkey joins a handful of countries that have imposed restrictions or outright bans on the use of Bitcoin, including India and Iran. The Indian government last month proposed a law banning cryptocurrencies, according to Reuters, with fines for anybody caught trading or even holding digital assets.

BBC News reported that Iran’s banks were banned from handling cryptocurrencies as far back as 2018, with officials claiming Bitcoin could be used for money laundering and for financing terrorism.

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