Buying something with Bitcoin (BTC) in Turkey will soon become illegal, and the topic of cryptocurrency payments became a political debate after 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 bans 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 the Blockchain Turkey Platform and co-author of Blockchain 101, described Turkey’s first cryptocurrency regulation as “how not to do” instead of “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 second is for payment service providers and electronic money companies. It is prohibited to offer services for trading, storage, transfer and export of cryptocurrencies, as well as transfer of money on these platforms. ”
Osta added that the negative tone of the declaration harms Turkey’s international reputation and credibility, explaining: “The positive conclusion of the declaration is, for the first time, the definition of encrypted assets in the legal framework.” Crypto-assets are now seen as “intangible assets that are physically generated using distributed ledger or similar technology and distributed over digital networks” instead of money.
Even the positive side of regulation is inconsistent with reality, although, according to him, “in the debate on the use of cryptocurrencies in international trade, declaring that it is not a payment instrument at a later stage can lead to problems”.
Comparing Turkey’s central bank decision with Russian cryptocurrency law, veteran financial journalist Erkan Oz explained that cryptocurrencies are only banned as a method of payment and that trading in them is still legal:
Ankara wants investors to only send / receive local currency to / from cryptocurrency exchanges via banks. In this way, the government will suppress potential unregistered transactions in order to fight the unregistered economy and finance illegal activities such as terrorism. ”
Cryptocurrency is not money
According to cryptocurrency professor 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 (“cryptocurrency” in Turkish) – and therefore can not be used. As a method of payment. In a Twitter thread, he noted that the new rules limit innovation among banking companies and hinder the development of cryptocurrency start-ups such as DigiliraPay in the country.
DigiliraPay is one of the local companies that is directly affected by the new rules. The business model includes a Know Your Customer (KYC) process and uses blockchain to use cryptocurrency on daily purchases. “Unfortunately, we have to stop the business from April 30, the day the regulations come into force,” said Serkan Bayar, CEO of DigiliraPay, in statements to Cointelegraph Turkey, adding: “At a time when world-famous companies such as Mastercard Tesla, PayPal and Starbucks is starting to receive payments through cryptocurrency, and we are very sorry 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 are completely open to any kind of audit. “The new central bank regulations are not market-oriented and will only serve to delay the use of cryptocurrencies in our country.”
While cryptocurrency payments will cease to exist, the DigiliraPay team is committed to improving the business model and finding alternative solutions to deal with regulation. Bayar added: “We hope that this regulation will be removed in the not too distant future, so that you do not miss out on opportunities such as blockchain technology and the daily use of cryptocurrencies that Turkey urgently needs to capture. Above.”
In the case of “bank fintech companies” mentioned by Polat, they were largely unaffected by the new decision. “We need to update our planned progress accordingly,” Samih Moshabak, CEO of central bank licensed financial technology company Sipay, told Cointelegraph Turkey. After the law, however, he emphasized: “We do not believe regulation will prevent end users from accessing cryptocurrency-related services. People will continue to use banks and other means to use crypto services.”