Cryptocurrency in Turkey: Slumping Lira Makes People Switch to Crypto

2021/12/31 09:12:42

As time passes, cryptocurrencies are used as a protective barrier against national currency inflation more and more. Turkey’s national turmoil is currently causing a massive amount of people to flock to crypto, both when it comes to holding and transacting with them.

Turkey’s National Turmoil

The Turkish lira’s dramatic descent has just added to a surge in cryptocurrency investing and trading in the country. The data suggests that the demand for crypto in Turkey increased massively in recent months, and especially since the end of February.

Turkey’s currency has dipped as much as 15% since President Tayyip Erdogan fired central bank Governor Naci Agbal earlier in March. This caused fear among the people as the country seems like it doesn’t have the answer to its shaky economy and devalued national currency. On top of that, Turkey’s inflation increased well above its 5% target as it reached 16% in February.

As a result of this, many people decided to convert their savings into crypto (mostly Bitcoin). On top of that, many shops started to accept crypto, which is now becoming an increasingly popular means of payment in the country.

Cryptocurrency in Turkey

Central bank instability tends to attract people away from their national currency, and towards cryptocurrency. As the lira dipped on Monday, internet searches regarding cryptocurrencies (mostly Bitcoin) spiked in Turkey, while searches for gold remained pretty much flat.

While there is no denying that a large number of people are trying to stay away from the Turkish national currency, it is quite interesting that, instead of gold being the main go-to wealth-preserving asset (as it was for many years), people chose cryptocurrencies.

Read more about Turkey’s crypto investment landscape here.

In Turkey, where the crypto space is currently unregulated, the young tech-savvy population can buy and trade cryptocurrencies without any boundaries. Crypto exchanges require no licenses to operate. On top of that, there are currently no specific tax laws that could apply to crypto.

This chain of events brought crypto trading volume in Turkey to 218 billion lira ($26 billion) over a period of two months, starting 1 February. As a comparison, the crypto trading volume amounted to 7 billion lira over the same period a year ago.

However, it’s important to note that the current rise in crypto purchases was not completely out of the blue. While the increase in trading volume was indeed exponential and massive, the increase in actual public interest in the crypto sector was steadily rising over the recent months, which further increased by Bitcoin’s rally to just over $63,000.

Crypto Regulation

While the current lack of regulation is certainly helping the overall Turkish population think about investing in crypto a bit more, the era of unregulated trade will soon come to an end.

Turkey sent a notice to cryptocurrency exchanges operating in the country requesting user information, all in hopes of regulating this area of trade. Treasury and Finance Ministry have asked for ID information, as well as the title to the value of the cryptocurrency in Turkish lira. The notice mentioned above was sent on Thursday, 8 April.

In a statement that followed the reports on the development, the ministry said financial intelligence units all around the world are fighting the laundering of criminal revenues and financing of terrorism, which they are seemingly connecting to cryptocurrency trading.

Stressing heavy usage of cryptocurrencies in money laundering schemes, the ministry noted that the Financial Crimes Investigation Board (MASAK) has the legal right to request information from trading platforms to prevent and track crimes.

However, the legal use of the crypto sector as an investment wasn’t mentioned as even one of the contributing factors to the recent action of the Turkish government.

How to Buy Cryptocurrencies in Turkey

Buying cryptocurrency in Turkey is as easy as accessing one of the numerous online exchanges and buying your desired cryptocurrency, just like you would any other product or service.

While there are several ways people can invest in crypto (peer-to-peer platforms, exchanges, crypto ATMs, etc.), most utilize regular online exchanges, where they could connect their credit or debit card, or their bank account to buy crypto.

If you would like to invest in or trade one of the numerous cryptocurrencies that KuCoin offers, you can do so by going to our our buy crypto page, where you can access your favorite crypto in just a couple of mouse clicks or screen taps.