Turkish President Recep Tayyip Erdogan announced he would be sending a law on crypto to the country’s Parliament, media sources reported on Friday. There are currently no effective regulations on crypto in Turkey, but it’s quite popular in the country. Erdogan told journalists in Istanbul:
The law is ready; we will send it to the Parliament soon without delay.
Growing acceptance of crypto is a challenge to Erdogan
The growing acceptance of Bitcoin and other cryptocurrencies is a challenge to the country’s authoritarian leader and his efforts to strengthen the struggling economy and the official currency, the lira. Turkey’s central bank announced a ban on the use of cryptocurrency for payments in April, but it’s still legal to hold crypto in the country.
At the time, central bank Governor Şahap Kavcıoğlu said that the Turkish Treasury and Finance Ministry was working on a law on cryptocurrency, but did not intend to prohibit its use. On Tuesday this week, the lira gained about 20% on news of measures to protect lira deposits.
Three national bank governors fired in two years
In March this year, Erdogan fired the head of the country’s central bank. This was his third fire of a national bank governor in two years and was perceived by investors as currency and institutional instability.
Erdogan is a fan of untraditional monetary policies, like cutting interest rates to limit inflation. Reportedly, he fired the governor for raising interest rates. After his unexpected move, the lira lost 15% against the U.S. dollar.
Internet crypto searches spike as lira plummets
National bank instability tends to provoke interest in cryptocurrency. With the decline of the lira, online searches related to cryptocurrencies increased. On the other hand, searches for gold, the country’s traditional inflation hedge, remained unchanged. Turkish people are free to buy and trade crypto at the moment because the space is still not regulated. Crypto exchanges do not require licenses to operate and no specific tax laws applying to digital assets exist.
In an interview with CoinDesk, crypto and blockchain lecturer Ismail Hakki Polat said the interest in crypto builds on a previous and more important story. He said:
From the very beginning of bitcoin, Turkish people have been eager for and interested in cryptocurrencies so it’s not a new thing like in Venezuela or Argentina.
In 2020, Turkish authorities estimated around 3% of the country’s population used crypto, or 2.4 million people. Polat believes this number could be much bigger, particularly after Bitcoin’s recent rally.
