Why Turkey Has Declared War On Cryptocurrencies?

Turkish authorities plan to develop their own digital currency and oppose the use of private crypto assets. Will the country follow the path of China and how this may affect the industry.

Last weekend, Turkish President Rajep Tayyip Erdogan held a meeting with students, during which he declared war on private cryptocurrencies.

According to the Turkish leader, the country’s authorities will not promote the proliferation of private digital assets, but will continue to develop and implement their own digital currency.

In April of this year, the Central Bank of Turkey introduced a ban on the use of cryptocurrencies as a means of payment.

The regulator also criticized Bitcoin due to too much energy consumption, volatility, lack of supervision and control mechanisms, and the inability to reverse transactions.

In the summer, the Turkish Mifin finished work on a bill that will regulate the circulation of cryptocurrencies in the country.

Consideration of the document by the parliament is scheduled for October this year. When developing the bill, the Turkish authorities were guided by the regulatory policy of the United States and Europe, but focused on a “tougher structure.”

Precedents for regulation

In the summer, Turkish crypto exchanges appeared on the world agenda in connection with the massive exodus of private investors from the lira to bitcoin, recalled the head of the data analysis department of CEX.IO Broker Yuri Mazur.

According to Mazur, this was due to the strongest collapse of quotations of the national currency of Turkey, and the bitcoin rate on some crypto exchanges reached near $ 100 thousand in terms of US dollars.

In April, two Turkish crypto exchanges, Thodex and Vebitcoin, suddenly stopped working at once. The head of the first is put on the international wanted list and is suspected of stealing $ 2 billion. The accounts of the second site are frozen by the Financial Crime Investigation Council (MASAK).

In the summer, the Chinese authorities imposed a number of restrictions on cryptocurrencies. Throughout the territory of the PRC, it was prohibited to conduct activities related to the extraction of crypto assets.

Also, banks and other financial organizations were prohibited from cooperating with companies whose activities are related to digital assets.

As a result of the policy of the Chinese authorities, more than 90% of miners left the country, which led to the largest drop in the bitcoin hash rate.

Practice of developed countries

By creating its own digital currency, Turkey follows the practice of developed countries, says Artem Deev, head of the analytical department at AMarkets.

According to Deev, the creation of their own cryptocurrency is necessary for the country’s authorities to ensure control over the transactions of businesses and the population.

“Private digital currencies are perceived by regulators as a competitor, which also defies regulation,” the analyst said.

The fight against cryptocurrency and the simultaneous development of its own digital analogue of the national currency are two interrelated things, Deev explained.

Deev recalled that China and Russia are acting in the same way now, and Turkey is only joining this trend.

“This is a“ clean-up ”of the country’s financial market before the launch of its digital currency,” added Deev.

In July, the People’s Bank of China published the first digital yuan project white paper in English, which describes the technical characteristics of the digital currency.

The document says that foreign tourists will be able to use the digital yuan without opening accounts with Chinese banks during the Winter Olympics, which will be held in Beijing in 2022.

The Bank of Russia plans to start testing the digital ruble in 2022. For this, a prototype of the new currency platform will be presented by the end of this year.

Impact on the crypto market

The statement by the Turkish President about waging a war against cryptocurrencies could negatively affect the digital asset market, said Ivan Sharov, CEO of the online store of mining equipment and computer components Hardvar.ru.

However, it is worth considering the fact that Turkey does not have such an influence on the crypto market as China, the expert noted.

“China’s plans for the digital yuan are titanic, the speed of implementation in all infrastructures is simply colossal,

while Turkey is only at the initial stages of development.

In the long term, Erdogan’s statements should not greatly affect the cryptocurrency market, ”Sharov said.

The same opinion is shared by the head of the data analysis department of CEX.IO Broker. According to him, Turkey’s influence on the cryptocurrency market will be minimal, since in the crypto community this country has never been seriously considered as a springboard for the expansion of digital assets.