Turkey bans cryptocurrencies and crypto assets for purchases
Turkey has banned cryptocurrencies and crypto assets, in a move unpleasant to many crypto investors and geeks. Turkey’s Central Bank has prohibited the use of cryptocurrencies and other crypto assets for the purchase of products and services, including Bitcoin. Turkey’s Central Bank issued the regulation. It states that cryptocurrencies and other digital assets based on distributed ledger technology would not be considered payment instruments. This would be effective from April 30, 2021.
“Payment service providers will not be able to develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance, and will not be able to provide any services related to such business models,”
The major concern for such a move is that irreparable harm and a significant risk to all parties in any transaction of digital tokens.
As per Reuters, Bitcoin’s value tumbled more than 4% on Friday after the announcement.
The authority mentions the lack of any oversight by any authority and central regulator as a security concern. As a result, using them to make payments may result in irrecoverable losses for the parties concerned.
The news comes amidst the rising popularity and adoption of cryptocurrencies. With more companies like Tesla, Royal Motors, Visa accepting cryptocurrencies, Turkey’s investors might miss a golden opportunity by banning them.
India and Crypto-regulation
With the ban, Turkey has joined a handful of countries which has either banned or are proposing to ban such currencies. Similar to Turkey’s Central Bank, the RBI had also prohibited banks to deal with entities transacting in cryptocurrencies, in 2018.
Although in the case of IAMAI v. RBI, the Supreme Court quashed the notification in March 2020, the government declared that it will ban cryptocurrencies in India based on the recommendations and a bill proposed by the Inter-Ministerial Committee (IMC) Report of 2019. This Bill was not discussed in Parliament however.
In Jan 2021, the government introduced the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 which will ban crypto-currencies while also granting the Reserve Bank of India (RBI) the legal authority to establish a Central Bank-backed Digital Currency (CBDC). Recent reports suggested that India will penalize the possession of cryptocurrencies.
The government needs to address its position towards cryptocurrencies and fill this regulatory void. There is a strong need to promote the adoption of such technology but at the same time protect consumer’s interests.
Do subscribe to our Telegram channel for more resources and discussions on technology law and news. To receive weekly updates, and a massive monthly roundup, don’t forget to subscribe to our Newsletter.
You can also follow us on Instagram, Facebook, LinkedIn, and Twitter for frequent updates and news flashes about #technologylaw.