On April 30th, the Central Bank of Turkey banned the trading of Bitcoin and cryptocurrencies. The financial institution has advanced in the development of its digital currency, completing the concept stage.
The president of Turkey, Recep Tayyip Erdogan, recently told several students that his government was in a war against Bitcoin. He made that claim when asked whether the Central Bank of Turkey would review its stance on the cryptocurrency.
On April 30th, that financial institution banned using Bitcoin and other cryptocurrencies as a means of payment. That prohibition prevents the direct or indirect use of crypto assets in providing payment services and issuing electronic money.
Erdogan stressed that they would not lift the ban or prevent the proliferation of BTC use among the Turkish population. Many citizens see the pioneering cryptocurrency as a store of value as the lira, the legal tender in that nation, is depreciating.
Due to that prohibition, the Turks can only trade crypto assets clandestinely. Many people are aware of the strength of Bitcoin against gold as a store-of-value asset. For that reason, they take their risks to invest in the cryptocurrency despite the limitations in their country.
The Turkish Government Does Want the Lira but Not Bitcoin
Besides banning the use of Bitcoin, the Central Bank of Turkey has expressed interest in launching a digital currency. Information agency Bloomberg reported that the institution had raised that idea in 2019 and has already completed the concept stage.
They would go from there to a testing stage, in which several technology companies such as Aselsan and Havelsan would participate. In addition, the Center for Science and Technology of the Eurasian country will engage in developing that project.
A Turkish CBDC Would Not Allow Anonymous Transactions
Bitcoin and other decentralized cryptocurrencies are different from central bank digital currencies regarding privacy and anonymity. The latter is like an enormous database with which a state entity controls the transactions that people conduct.
The Bahamas, which already has its digital sand dollar, is the most advanced country regarding this type of currency. However, the best-known CBDC is China’s digital yuan, which is in the late stages of its testing phase. The Chinese state cryptocurrency could be fully operational during the Beijing Winter Olympics in February 2022.
Financial privacy and anonymity in transactions may not be possible with the digital currency of the Central Bank of Turkey. It could follow in the footsteps of other CBDCs, for which the government would have access to the history of each citizen’s operations.
Chinese officials say that the purpose of that is to help people get their money back and protect their safety in the event of fraud. Like China and many other governments worldwide, Turkey only views cryptocurrencies as a factor in illicit activities like money laundering and terrorism financing. For that reason, they work to create regulations to control or prohibit their use by citizens.
By Alexander Salazar
