Turkey bans payment in cryptocurrencies

Turkey will bar consumers and businesses from exchanging payment for goods and services in Bitcoin and other cryptocurrencies.

Turks will not be allowed to use the currencies directly or indirectly for their purchases, according to a central bank decision published on Friday. The curbs will be implemented from April 30, the bank said in regulations published in the Official Gazette.

Turkey has seen a surge in demand for Bitcoin and other cryptocurrencies after the lira sank against the dollar and euro and inflation surged.

The currencies "entail significant risk" including excessive volatility in value and lack of security, the central bank said in its reasoning for the decision. They may also be used in illegal activities due to their anonymous structures, it said. 

Trading volumes in Bitcoin between the start of February and March 24 hit 218 billion liras ($19 billion) from a little over 7 billion liras in the same period of 2020, the Guardian newspaper reported this week, citing an analysis of data by Reuters.

Cryptocurrency is banned in countries including Egypt, Morocco and Algeria. Curbs on its use in banking exist in Canada, Russia, China, Saudi Arabia, Jordan, Qatar and Iran. 

The lira has lost half of its value against the dollar since a currency crisis in 2018. Since the middle of last month, it has slumped by more than 10 percent after President Recep Tayyip Erdoğan sacked and replaced the country’s hawkish central bank governor. The bank left interest rates of 19 percent on hold on Thursday despite an uptick in inflation.

Inflation in Turkey accelerated to 16.2 percent in March from 15.6 percent in February, further eroding the lira’s value. It is expected to nudge higher in April.

(This story was updated with central bank comment in the fourth paragraph, bans in other countries in sixth.)

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