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The Central Bank of the Republic of Turkey (CBRT) has banned the use of cryptocurrencies and other digital assets for the purchase of goods and services, citing possible “irreparable” damages and significant risks from such transactions, according to legislation published in the country’s Official Gazette, Reuters reports as quoted by Agerpres. Following this announcement, bitcoin dropped by 2.59% to $ 61,757.
According to the CBRT, cryptocurrencies and other digital assets of this type, based on distributed ledger technology (DLT), cannot be used, directly or indirectly, as payment instruments. “Payment service providers will not be able to develop business models in a way that cryptocurrencies are used, directly or indirectly, in the provision of electronic payment and issuance services and will not be able to provide services related to such services”, the Central Bank of Turkey informs.
Recently, there has been a boom in the cryptocurrency market in Turkey, amid the depreciation of the national currency and high inflation. In a statement explaining the reason for the ban on the use of cryptocurrencies and digital assets, the Bank of Turkey claims that these assets “are not subject to supervisory and regulatory mechanisms. It is considered that their use for payments could cause irrecoverable losses for the parties involved in the transactions and they include elements that could undermine the confidence in the current payment methods and instruments ”.
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Last week, authorities in Ankara authorities asked trading platforms to provide user information. The legislation will enter into force on April 30.
Warning from Romania’s Central Bank
The National Bank of Romania also informed on Thursday that it found that the trend of increasing public interest in virtual currencies (also called cryptocurrencies) was maintained and pointed out that, in its opinion, they continue to be very volatile and extremely risky speculative assets with a high potential to generate financial losses for investors.
Although the Banking Authority issued the opinion that the risk of illicit use of virtual currencies remains high, premises have been created for its administration. Thus, the providers of exchange services between virtual currencies and fiat currencies and digital wallet providers are obliged, starting with July 15, 2020, to comply with the provisions of Law no. 129/2019 for preventing and combating money laundering and terrorism financing; these providers must also be registered with and authorized by the Ministry of Finance, through the Commission for the authorization of the foreign exchange activity to issue such services.
At the European level, the process of regulating virtual currencies and related service providers are now underway, and negotiations are currently taking place between the Member States on the basis of the European Commission’s proposal for a Regulation on the cryptocurrency market.
The regulations of the National Bank of Romania do not contain provisions that prohibit credit institutions from offering account services to providers of exchange services between virtual currencies and fiat currencies and to providers of digital wallets, the central bank’s communiqué also states. The manifestation of some risks specific to the possession and trading of virtual currencies and the significant volatility of the price of some traded virtual currencies do not represent at this moment a threat to the financial stability in Romania, the NBR considers.