In a move that cooled global bitcoin prices, Turkey's central bank barred the use of cryptocurrencies and crypto-assets to buy products and services, citing potential "irreparable" harm and major transaction risks. A new ban in Turkey would bar crypto holders from making payments with their digital assets, as well as payment providers from depositing funds into their digital wallets at crypto exchanges.
Turkey's burgeoning crypto market has gained traction in recent months as investors sought to hedge against the lira's decline and rising inflation, which exceeded 16% last month. Bitcoin BTC is currently trading at $60,504.16, down 3.43%, following the Turkish ban, which was opposed by the main opposition group.
The decision to prohibit cryptocurrency payments across the country comes as the Turkish lira has been under considerable selling pressure from abroad. Following President Recep Tayyip Erdogan's dismissal of the country's top central banker, Naci Agbal, in March, the currency plunged in foreign exchange markets.
The ban will take effect on April 30, according to a Friday statement by the Central Bank of the Republic of Turkey, making all crypto payments solutions and collaborations illegal.
"Any direct or indirect use of crypto assets in payment services and electronic money issuance" would be prohibited, according to the bank.
Although banks are exempt from the law, users would be unable to deposit or withdraw Turkish lira on crypto exchanges using wire transfers from their bank accounts.
In Turkey, payment platforms and digital wallets are commonly used to send fiat funds to cryptocurrency exchanges and vice versa. When Binance first entered the Turkish market, they partnered with local payment provider Papara to provide a lira onramp for a variety of cryptocurrencies.