Turkey will ban the use of cryptocurrencies as a form of payment following months of economic turbulence that spurred locals to swap the local currency for bitcoin and foreign currencies.
Turkey’s central bank said Friday that cryptocurrencies are excessively volatile and can be used for illegal activities. The bank also said crypto assets are “neither subject to any regulation and supervision mechanisms nor a central regulatory authority.”
The move against bitcoin use comes amid a global rally in cryptocurrencies. Bitcoin, ether and dogecoin hit record highs this week. The U.S. listing of crypto exchange operator Coinbase Global Inc. drew increased appetite among individual investors around the world to buy and sell cryptocurrencies.
Cryptocurrencies such as bitcoin, which are independent of central banks and created by so-called computer miners, are seen as a threat to government issued currencies. China keeps a tight leash on bitcoin trading. Nigerian officials said recently that the increasing use of bitcoin could erode the value of the local currency, the naira. Locals there have struggled to gain access to foreign currencies, turning to the black market or bitcoin, according to traders.
In Turkey, use of cryptocurrencies has added appeal after the lira fell sharply in recent weeks. President Recep Tayyip Erdogan abruptly fired the country’s central bank governor in March.