- Turkish laws keep the growth of the crypto industry in check as the lira suffers its worst devaluation in years.
- Faced with the macro devaluation of the currency, President Recep Tayyip Erdoğan announced that the Turkish state would be offering guarantees to savers.
- The law to regulate BTC is to be sent “without delay” to parliament.
Binance, the Japan-based crypto exchange giant with offices in the United States and a number of other countries around the world, has been fined 8 million lira (approximately $750,000 USD) by the Turkish government, after allegedly violating the regulations of the Eurasian country.
In response to the sanction, Binance revealed in a statement that it is currently working together with the Turkish state in order to support the creation of a sustainable, healthy and safe ecosystem.
The government of President Recep Tayyip Erdoğan has already completed a law to regulate Bitcoin and other crypto assets, reported Turkish newspaper NTV. “We will send it to parliament without delay,” Erdogan announced on December 24th.
The government did not offer any details in regards to the content of the legislation, although everything seems to indicate that the regulations will seek to control the flow of cryptocurrencies, as well as transactions in the country.
At a time when the lira has depreciated to historic levels in recent weeks as a direct result of Erdogan’s messages lowering exchange rates and the financial crisis, the government is seeking to revalue its national currency.
Currently, the lira is trading at 0.087 against the U.S. dollar. Last week, the Turkish currency rallied by more than 20%, after President Erdogan promised that savers would be able to recoup their losses if they maintained their deposits in the national currency.
“Citizens will see that the guarantee of their money is the central bank, the guarantor of the treasury,” Erdogan said during his statements to the specialized economic press on December 24th.
He also announced that Turkey will be transitioning towards a new economic model. “We know that we have risks and opportunities ahead of us. These risks are worth taking.”
On the Flipside
- Turkey has been going through severe social and financial crises this year. In an attempt to alleviate the situation and recover the value of its currency, the government has had the use of cryptocurrencies as payments for goods and services prohibited since the start of the year.
- Furthermore, the Central Bank of Turkey has expressly restricted the use of cryptocurrencies in order to “develop business models or provide any services related to said business models.”
- In this way, the issuer sought to prevent “crypto assets from being used directly or indirectly in the provision of payment services and in the issuance of electronic money.”
- On September 18th, Erdoğan declared war on Bitcoin, and declared that not only would the bans approved by the Central Bank not be lifted, but that his government would take action to prevent the proliferation of cryptocurrency in his country.
Why You Should Care
- Turkey is seeking to re-float its currency, which has lost around 85% of its value over the last 10 years. As much as the Turkish government has attempted to influence the foreign exchange market, in the end it will be the market that determines how much the lira is worth.
- As in other countries with financial problems and high inflation, Turks are using cryptocurrencies to protect themselves from the crisis, in its familiar role as a hedge.