Bitcoin Plummets On News Of Turkey’s Ban On Crypto Payments

bitcoin with Turkish flag

Bitcoin dropped more than 4 percent on Friday (April 16) after Turkey’s central bank banned the use of cryptocurrency and associated assets as a payment method. 

The Central Bank of the Republic of Turkey said that using crypto for purchases could cause “irreparable” damage and transaction risks, Reuters reported.

The Official Gazette of the country spelled out the ruling that cryptocurrencies “and other such digital assets based on distributed ledger technology” cannot be used to pay for goods and services, directly or indirectly.

The central bank said in a statement that crypto assets were “neither subject to any regulation and supervision mechanisms nor a central regulatory authority,” per Reuters.

After Turkish President Recep Tayyip Erdogan abruptly fired the central bank’s governor in March, trading in digital currencies rose and the lira plummeted. 

Turkey’s crypto market had escalated in recent months, fueled by investors jumping into the rally that ignited a price surge, The Wall Street Journal reported. Bitcoin more than doubled in value and investors hedging against the lira triggered its depreciation and 16 percent inflation in March.

Bitcoin was down 4.6 percent — $60,333 — following Turkey’s ban, a move that was criticized by the leader of the  country’s main opposition party. Along with the bitcoin plummet, smaller digital currencies like ethereum and XRP also dropped 6 to 12 percent. One bitcoin today is worth almost half a million lira, according to CoinDesk, per Reuters.

Bitcoin and other digital currencies have been a thorn for many countries and financial institutions as they seek to regulate a digital concept that is both an asset and a payment tool. BNY Mellon, for example, said in February that it is introducing a new unit to accelerate the expansion of bitcoin, cryptocurrency and other digital assets.

Citi report — Digital Money 2.0 — released on Friday (April 16), indicated that the future of money could include cryptocurrencies, stablecoins and central bank digital currencies (CBDCs).