Turkish Central Bank announces new restrictions on cryptocurrency payments

In a new legislation published on April 16 in the Official Gazette, the Turkish Central Bank has declared that it will prohibit cryptocurrency payments for goods and services as of April 30. The central bank cited multiple concerns regarding cryptocurrencies, underlining their lack of a central authority, the non-recoverable nature of most transactions, and the market's extreme volatility. The decision was briefly felt in cryptocurrency markets, as Bitcoin fell 4% following the statement. 

Turkey has the largest volume of cryptocurrency transactions in the Middle East. Much of cryptocurrency's popularity in Turkey is attributable to the deterioration of the Turkish Lira in the past years. For these reasons, the central bank's decision appears to be largely aimed at encouraging greater domestic investment into the Turkish Lira and Istanbul Stock Exchange.

The legislation has seen backlash online from both domestic and foreign cryptocurrency supporters. More significantly, opposition leader Kemal Kılıçdaroğlu criticised the lack of consultation and transparency in reaching this decision. 

Turkey has now emerged as one of the first countries to impose actual regulatory measures on this nascent digital technology. Turkish residents will still be able to purchase and hold cryptocurrencies on exchanges despite the ban on payments.