Crypto Banned in Turkey: Now What?

Paying with Bitcoin (BTC) will soon be illegal in Turkey. The issue of crypto transfers has become a political hot topic after the Central Bank of the Republic of Turkey announced on April 16 that the use of cryptocurrencies will be banned. The rule, which will take effect on April 30, also prohibits the use of wallets (to store your crypto coins), ICOs and crypto exchanges.

Turkey’s first crypto check is a “how-not-to-do” rather than a “how-to”, according to Ahmet Usta (editor-in-chief of Blockchain Turkey Platform and co-author of Blockchain 101). According to him, the Central Bank would ban two applications:

“The first prohibition is to pay with cryptocurrency for the purchase of goods. The second ban is exclusive to payment processors and crypto suppliers. It makes it illegal to trade, store, convert or convert crypto assets into fiat money or transfer money through an exchange. ”

“The good thing about the announcement is the classification of crypto assets within a legal context. That’s happening now for the first time,” said Usta, adding that the critical tone of the announcement is damaging the foreign image and trustworthiness of the company. Turkey. Cryptocurrencies are now classified as “intangible assets created virtually using a distributed network”. According to Ahmat, it should be seen as a currency.

“In the discussion of the use of cryptocurrency in foreign trade, the announcement that it is not a means of payment could lead to problems later on,” he says.

Erkan Z, a former financial journalist, compares the Turkish Central Bank’s decision to Russian crypto legislation. There, cryptocurrencies are forbidden to use as a means of payment, but trading is just legal. Ankara is thus demanding that investors will only use banks to send and receive local currency to and from crypto exchanges. With this, the government wants to stop criminal activities. Crypto Italia is popular.

Cryptocurrency is not the same as fiat money

“This is the Central Bank’s way of letting people know that cryptocurrencies are not monetary assets, despite the fact that people were not already using the people ‘kripto para’ (” cryptocurrency “in Turkish) as a means of payment,” said crypto. information officer Smail Hakk Polat. In a Twitter thread, he claimed that the new regulations are diminishing banks’ creativity and stunting the growth of crypto payment startups like DigiliraPay.

One of the local businesses directly affected by the new law is DigiliraPay. Its business model includes a Know Your Customer (KYC) mechanism and uses blockchain technology to facilitate the issuance of cryptocurrencies for everyday use. “Unfortunately, we will have to cease operations on April 30, which is the day the legislation will go into effect,” DigiliraPay CEO Serkan Bayar told Cointelegraph Turkey. “At a time when globally renowned companies such as Mastercard, Tesla, PayPal and Starbucks have begun to accept payments via cryptocurrencies, we are very sorry that these services will not be available in our region,” he added.

Bayar clarified that in the DigiliraPay ecosystem, tax avoidance is difficult as all transactions are logged on the blockchain, making them fully auditable. “The latest Central Bank regulations are not geared to the needs of the corporate world and can only hinder the adoption of cryptocurrencies in our region.”

The second aspect of the ban ensures that consumers can no longer deposit or withdraw money from crypto exchanges using local PayPal substitutes (PayPal has been banned in Turkey since 2016). After the announcement by the Central Bank, Papara, a prominent provider of digital wallets has become the subject of discussion on Twitter. Netherlands crypto is popular.

“More than a million people have used Papara wallets to trade on crypto exchanges in the past five years,” said Ahmed Faruk Karsl (Papara CEO). He added the following:

“If the goal was to deter malicious users by not giving them access to crypto, then this is not the way to go. The methods we use to control transfers to crypto exchanges are more strict than those used by many banks. To date, millions of transactions have been completed without a single instance of theft. ”

What would better enforcement have looked like?

Usta (a co-author of Blockchain 101) has a clear answer: “We need to build an environment conducive to creativity. It cannot be denied that regulation including negative verbs encourage creativity