Turkey: Erdogan declares war on crypto
Turkey: Erdogan declares war on crypto

Turkey: Erdogan declares war on crypto

By Riccardo Mangiapane - 21 Sep 2021

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On Saturday, 18 September, Turkish President Recep Tayyip Erdogan declared war on crypto because, according to the government, the country is not ready for them even though it is moving towards adopting its own digital currency.

Turkey, Erdogan will not support crypto

The President expressed his views on the matter during the “Meeting With Youth” event held with university students from 81 provinces in Mersin, a port city important for the country’s economy.

One of the participants asked whether the Turkish central bank was interested in opening up to cryptocurrencies, considering the fact that in early September the central bank created a new platform to research and test a digitized version of the Turkish lira, called the Digital Turkish Lira Collaboration Platform.

Erdoğan’s response was firm and decisive:

“On the contrary, we have a separate war, a separate fight against them. We would never provide support for cryptocurrencies. Because we will carry on with our own currency that has its own identity”.

The main reasons behind this decision are surely regulatory uncertainty, extremely high volatility and the criminal activities that are operating in the crypto market.

Turkey cryptocurrencies
Turkish government banned cryptocurrencies for making payments

Turkish crypto regulation

In April 2021, the Turkish government banned the use of cryptocurrencies for making payments in the country.

At the same time, the Turkish central bank was preparing to launch a platform and analyzed the possibility of issuing a central bank digital currency (CBDC), the digital lira.

The initiative of a CBDC of the Republic of Turkey, in collaboration with the Scientific and Technological Research Council of Turkey (TÜBITAK), was driven by an explosion in the popularity of cryptocurrencies in the country.

While the Turkish Lira continued to lose value due to the government’s political moves, there was a 60% increase in the volume of cryptocurrency purchases.

During the meet-and-greet with the students, former Prime Minister Binali Yıldırım, now leader of the Justice and Development Party, also took the floor, expressing his opposition to using crypto in this way:

“Unfortunately, cryptocurrency also opens the door to grievances. So, it’s something that needs serious control. We may need to make arrangements as a state, as a government, in order to prevent these abuses and mistakes.”

It is likely that after President Erdoğan’s comments, the country’s regulators will take an even stricter approach to cryptocurrency.

Riccardo Mangiapane

Graduated in Management and Finance at LUMSA University in Rome. Passionate about fintech and crypto, he follows with interest the events in the financial markets, cooperating as part of a team in the analysis of several case studies during his academic career.

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