Turkey’s cryptocurrency ban to come into effect
The Central Bank of the Republic of Turkey (TCMB) ban on the use of cryptocurrencies for purchasing goods and services comes into effect today.
This decision risks interrupting the development of the local crypto-asset market, which has accelerated in recent months with the rapid rise in Bitcoin prices. Additionally, Turkish crypto-traders use the currency as an instrument of protection against two-way inflation and the depreciation of the Turkish lira. The move follows the dismissal of TCMB’s governor and the strengthening of President Recep Tayyip Erdogan’s grip on the Turkish economy.
Turkey’s economy remains in flux despite the crypto ban. At issue, Ankara needs to attract foreign investors to finance its current deficit, which reached $36 billion last year, equivalent to more than 5% of its GDP. Likewise, it is likely the failing economy—which had long been a symbol of strength for Erdogan—has pushed him to show a less assertive foreign policy to attract investors.
Expect Erdogan’s interference in cryptocurrencies and monetary policy writ-large to keep investors wary of entering Turkish markets. Still, as the President’s political future is tied to the country’s economic health expect Erdogan to leverage Turkey’s diplomacy and unique geographical position to secure Ankara’s economic future while continuing his interference in fiscal policy.
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