Buying anything with Bitcoin (BTC) in Turkey will soon become illegal and the topic of cryptocurrencies has become a political debate since the Central Bank of the Republic of Turkey announced on April 16 that it would ban the use of cryptocurrency as a method of payment. The decree, which takes effect on April 30, also prohibits digital wallet providers from using fiat ramps to exchange cryptocurrencies.
Cointelegraph Turkey has contacted local blockchain and crypto operators for comment. Ahmet Usta, Editor in Chief of Blockchain Turkey Platform and co-author of Blockchain 101, described Turkey’s first crypto regulation as “how-not-to-do” rather than “how-to-do”. Cointelegraph told Turkey that the central bank will ban two uses:
The first is to use cryptocurrency to pay for anything. The other is for payment service providers and e-money companies. It is forbidden to provide services for trading, storing, transferring and exporting encrypted real estate, as well as transferring funds on these platforms. ”
Osta added that the negative tone of the declaration harms Turkey’s international reputation and credibility, explaining: “The positive result of the announcement is for the first time to define cryptocurrencies in a legal framework.” Crypto assets are now seen as “intangible assets that are practically created using distributed ledger or similar technology and distributed over digital networks” rather than money.
Even the positive side of regulation does not justify itself, however, he says, “in the debate about the use of cryptocurrencies in international trade, problems may arise later if we say that it is not a payment tool.”
Comparing Turkey’s central bank decision to Russian cryptocurrency legislation, experienced financial journalist Erkan Oz stressed that cryptocurrencies are only prohibited as a form of payment and that trading with them is still legal:
Ankara wants investors to send / receive local currency to / from cryptocurrency exchanges via banks. Thus, the government will work to slow down potential unregistered transactions in order to fight the unregistered economy and finance illegal activities such as terrorism. ”
Cryptocurrency is not money
According to crypto records Ismail Hakki Polat, this is the central bank’s way of warning people that cryptocurrencies are not monetary assets, no matter how many times people call them a cryptocurrency pair (“crypto money” in Turkish) – they cannot be used as a medium To pay. In his Twitter thread, he noted that the new regulations are restricting innovation among banking companies and crippling the development of cryptocurrency startups like DigiliraPay in the country.
DigiliraPay is one of the local companies directly affected by the new rules. The business model includes a KYC process and uses the blockchain to enable the use of cryptocurrency in everyday purchases. “Unfortunately, we must stop our operations on April 30, the day the law comes into effect,” said Serkan Bayar, CEO of DigiliraPay, in statements to Cointelegraph Turkey, adding: “At a time when world famous companies like Mastercard started operating , Tesla, PayPal, and Starbucks. Accepting payments through cryptocurrency, we deeply regret that these services will not be available in our country. ”
Bayar explained that it is impossible to avoid taxes in the DigiliraPay ecosystem because all transactions are registered on the blockchain, and they are completely open to any kind of auditing. “The new central bank regulations are not market oriented and will only delay the use of cryptocurrencies in our country.”
While cryptocurrency payment transactions will cease to exist, the DigiliraPay team strives to improve the business model and find alternative regulatory solutions. Bayar added, “We hope that these rules will be lifted in the not-too-distant future in order not to miss opportunities such as blockchain technology and the daily use of cryptocurrencies that Turkey urgently needs to catch up with.”
As for “banking technology companies”, as Polat mentioned, the new decision will not affect them. “We need to update planned progress accordingly,” Samih Moshabak, CEO of the central bank licensed financial technology company, Sipay, told Cointelegraph Turkey. However, after the law was passed, he emphasized the following: “We do not believe that regulation will prevent end-users from accessing services related to cryptocurrencies. People will continue to use banks and other means to use crypto services.”
The second part of the ban basically means that users will not be able to use PayPal’s local features (PayPal has been banned in Turkey since 2016) to deposit or withdraw money to and from cryptocurrency exchanges.