A physical imitation of a Bitcoin at a cryptocurrency “Bitcoin Change” shop, near Grand Bazaar, in Istanbul, Turkey on Sep. 24, 2020.
AFP via Getty Images
Bitcoin fell early on Friday, after Turkey’s central bank decided to ban the use of cryptocurrencies for payments from the end of the month.
The Central Bank of the Republic of Turkey (CBRT) cited a number of reasons for the ban, including a lack of “supervision mechanisms” and “central authority regulation” for crypto assets.
It said that market values can be “excessively volatile,” adding that digital wallets can be stolen or used unlawfully and that transactions were irrevocable.
The benchmark cryptocurrency slipped 4.8% to $60,341, after reaching all-time highs above $64,000 earlier this week ahead of crypto exchange platform Coinbase’s initial public offering. Ether, the world’s second-most prominent crypto, also fell 5.2%.
“Payment service providers cannot 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 cannot provide any services related to such business models,” according to the new regulation.
The CBRT said it had taken the decision amid a rise in the use of crypto assets to make payments.
Last month, Tesla Chief Executive Elon Musk said Americans could now buy a Tesla with Bitcoin and that people outside the U.S. would be able to do the same later this year. Electric-car maker Tesla said it acquired $1.5 billion worth of Bitcoin in February, announcing plans to also use it as a form of payment. Online payments service PayPal also started letting U.S. customers purchase items with cryptocurrencies at the end of March.
But the CBRT said crypto asset payments came with “significant risks.”
“It is considered the use in payments may cause nonrecoverable losses for the parties to the transactions due to the above-listed factors and they include elements that may undermine the confidence in methods and instruments used currently in payments,” it said.
Turkey isn’t the only country looking to take tough measures on digital assets. India is reportedly set to propose a law banning cryptocurrencies and making trading or even holding assets punishable with a fine. The bill was included in a government agenda in January, which also referenced plans to create an official digital currency issued by the Reserve Bank of India. “The bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses,” according to the agenda.
