Turkey bans Crypto Currency payments

The Bitcoin currency tumbled more than 4% after the Central Bank of Turkey banned the use of Crypto currencies and crypto assets for purchases. The bank cited possible irreparable damages and transaction risks as the reason for the ban.

The ban followed actions of Morocco in banning the currency and is expected to be implemented in India as well.

What is the issue?

In March 2021, the Turkish President Erdogan fired the top central banker Naci Agbal. This forced several businessmen to turn towards crypto currency as an alternate method. This increased the growth of crypto currency market in Turkey. Bitcoin had surged by 111% and the second largest crypto currency Ethereum jumped by 225%.

However, after the ban, the Bitcoin was down by 4.6%. The Bitcoin was at 60,333 USD after the ban. The other smaller coins such as XRP, Ethereum that tend to move in tandem with bitcoin fell between 6% and 12%.

Regulations

The recent Turkey regulations of Crypto currency mainly targets payments using crypto currencies for goods and services. It also prohibits companies from handling electronic fund transfers that involve crypto currency platforms.

The consumer complaints against crypto currencies increased by 8,616% in February 2021 as compared to that of the previous year.

Why did Turkey ban Crypto Currencies?

According to Turkey, the Turkish Government was finding it difficult to monitor and control the market volatility and illegal activities in the crypto currency market. Also, the wallets were highly vulnerable to thefts.

The Turkish Government predicts that the anonymity behind the digital tokens will bring risks of non-recoverable losses.

Month: Current Affairs - April, 2021