A new ban in Turkey will prevent all crypto holders from using their digital assets for payments. It will also prevent payment providers from adding funds to their digital wallets at cryptocurrency exchanges.
Based on an April 16, 2021, announcement by the Central Bank of the Republic of Turkey, this ban is set to take effect on April 30, rendering all crypto payments solutions and partnerships illegal. The bank said:
“any direct or indirect usage of crypto assets in payment services and electronic money issuance will be forbidden.”
The central bank is also banning payment providers from providing fiat-to-crypto onramps for crypto exchanges. But, while the banks are excluded from this regulation, meaning that clients can still deposit Turkish lira on crypto exchanges using wire transfers from bank accounts, the payment providers will not offer deposit or withdrawal services for the crypto exchanges.
Digital wallets and payment providers are majorly used in Turkey to transfer fiat funds to the crypto exchanges and vice versa. Binance crypto exchange has partnered with local payment provider Papara when they first joined the Turkish market to offer a lira onramp for multiple cryptocurrencies.
Notably, the new regulation dates mean that the users have two weeks to clear their balances in case they exclusively use the services of payment providers as fiat-to-crypto gateways.
The Turkish government has historically had a huge grip on the payment ecosystem. In 2016, Turkey banned major global payment provider PayPal in the country. In recent months, the crypto regulation discussion has become a hot topic in Turkey.
In March, the Turkish Ministry of Treasury and Finance said that they are monitoring the cryptocurrency ecosystem. They are working closely with the Banking Regulation and Supervision Agency, Central Bank, and Capital Markets Board to regulate the cryptocurrency market.
The Crypto Market Reacts
Dogecoin’s historic reversal of fortune came at the expense of Bitcoin (BTC) on the day, with the flagship crypto seeing a forecast retest of the past all-time highs around $61,000. Multiple tests of $61,000 support left the door ajar for more dips, bringing the daily losses to nearly 2.8%.
BTC’s market cap dominance stood at 52.1%, which is also down considerably in recent weeks as altcoins enjoy their time shining which several analysts think will peak sometime this summer.
A major ban on transactions by Turkey’s central bank was suggested to have fueled the loss of upside momentum, this being done as a result of possible “irreparable” side-effects to the nation’s established fiat payment network. Reuters quoted a statement as saying:
“It is considered that their use in payments may cause non-recoverable losses for the parties to the transactions due to the above-listed factors and they include elements that may undermine the confidence in methods and instruments used currently in payments.”
Ether is also showing some signs of cool-down, dropping back to around $2,400 after recording all-time highs above $2,500 barely a day ago.