Turkey’s draft crypto bill is ready and will soon be sent to parliament, Turkish President Recep Tayyip Erdoğan said Friday during a press conference in Istanbul.
“We will take a step right away and send [the draft bill] to the parliament,” Erdoğan said. Although Erdoğan didn’t disclose much in the way of details this time, he said in September that the government “has absolutely no intention of embracing cryptocurrencies.”
Erdoğan said at the time the country would "move forward with our own currency that has its own identity.”
Despite the tough words, there’s no expectation of a crypto ban.
Minister of Treasury and Finance Lütfi Elvan ruled one out in May, commenting a month after two Turkish cryptocurrency exchanges, Thodex and Vebitcoin, disappeared overnight. The customers of those exchanges lost access to their funds, with estimates varying from hundreds of millions of dollars to billions.
Mertcan Bayraktar, a lawyer who represents several Thodex victims in court, told Decrypt that he doesn’t expect the Thodex-Vebitcoin scandal to shape the crypto bill. He believes the law will emphasize taxation and the legal status of cryptocurrency exchanges, such as whether they should be treated like banks or exchange bureaus.
The status of cryptocurrency exchanges matters because Turks increasingly use them to sell the Turkish lira for U.S. dollar-pegged stablecoins, according to Bayraktar. The Turkish lira has fallen by 34% against the U.S. dollar this year but has gone up by 41% this week after a precipitous drop earlier this year, according to TradingView. The greenback is widely seen as a store of value in Turkey, where the local currency sometimes trades like a volatile memecoin.
What a month. Never seen FX volatility like this. Question though. New economic programme relied on cheaper currency to improve current account. Have they changed the story? Now they want a strong lira? pic.twitter.com/Xbv3eqargQ
— Timothy Ash (@tashecon) December 23, 2021
“Although elderly Turks use banks and exchange bureaus to buy the U.S. dollar, crypto exchanges are highly popular for people under the age of 40 [to buy dollar-pegged stablecoins]," Bayraktar said. "They treat crypto exchanges like online and more convenient alternatives to old-school exchange bureaus.”
Cryptocurrency exchanges are open 24/7 and offer better rates than banks or exchange bureaus when it comes to foreign currency trade, he explained.
But the Turkish government wants people to invest in the lira. This week it launched government-backed savings accounts that are indexed to the price of the U.S. dollar. It hopes to encourage people to switch back from the dollar and just… hodl the lira.
“Crypto has added another battle for the Turkish government,” Bayraktar said. “There was always the fiat alternative to the Turkish lira, and now there are fiat-pegged crypto alternatives, in addition to Bitcoin and altcoins.”
Now the government has to convince the people its money is a better value.