Turkey Bans Cryptocurrencies For Payments, Drives Bitcoin Lower

The Turkish central bank announced a ban the use of cryptocurrencies and related assets as a payment method, maintaining that transactions in digital currencies have the potential for “irreparable” damages and significant risks. The move has driven significant volatility in the cryptocurrency market that had only a few days ago cheered a positive development towards mainstream acceptance.

According to the Central Bank of Turkey (CBRT), crpytocurrencies and other digital currencies based on blockchain technology can no longer be used – directly as well as indirectly, towards the purchase of goods and services. With the Turkish lira weakening amid soaring inflation, several users from the country had turned to trading cryptocurrencies to make the most of the recent rally in the markets.

In a legislation published overnight in the Official Gazette, the bank states, “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 ban is scheduled to come into effect starting on April 30, as the CBRT feels the use of cryptocurrencies as a method of payment could undermine the confidence in other existing payment instruments and methods being used. The release of this news has already triggered a bearish move in cryptocurrencies, with Bitcoin prices falling by over 2% so far.