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While some political and corporate leaders have been eager to invest in and adopt cryptocurrencies, others are entirely hostile. Turkish President Tayyip Erdogan recently declared outright war on the Bitcoin network.
President Erdoğan: “We Are At War”
President Erdoğan expressed his opposition to Bitcoin in a meeting with Turkish students this Saturday. The event comes after one of them asked if the country’s central bank would adopt cryptocurrencies. Erdogan responded with total rejection:
“We have absolutely no intention of embracing cryptocurrencies. On the contrary, we have a separate war, a separate fight against them. We would never lend support to [cryptocurrencies]. Because we will move forward with our own currency that has its own identity.”
The question was posited in specific reference to the Digital Turkish Lira Collaboration platform– an R&D project involving multiple technology stakeholders developing a “Digital Turkish Lira” prototype. While Erdogan remains open to blockchain technology as a whole, other cryptocurrencies– such as Bitcoin– allegedly pose a threat to Turkish identity, of which the Lira has become a part.
“We are in a war against Bitcoin,” he said.
This comes after the Turkish government implemented a sweeping ban on cryptocurrency in April. The ban prohibited the use of cryptocurrency as a direct or indirect payment tool after April 30th. Among the security risks they cited for the ban were price volatility, irreversible transactions. Also, a lack of regulatory oversight weighed heavily on their decision. Banks, however, were exempt from this regulation. This means that citizens can still use wire transfers to deposit Lira onto exchanges and invest in crypto.
What Cryptocurrency Truly Threatens
Erdogan and the Turkish government have listed multiple reasons for opposing cryptocurrency. However, they may have other (perhaps more significant) reasons for doing so that they didn’t mention.
After Turkey’s debt crisis in 2018, many citizens began fleeing to cryptocurrencies to hedge against the Lira’s inflation. While the Lira’s purchasing power dropped by 10%, cryptocurrency purchase volume rose by 60%. Many citizens have now engaged in cryptocurrency purchases or transactions at least once, according to a poll.
This surge in crypto popularity among Turks is likely to have forced the government’s hand in constructing a digital lira. The government outlined this in its economic development framework to recover the country’s economy by 2023.
By attracting crypto users over to the digital Lira, the government would still enact monetary controls over their citizens’ currency. Meanwhile, they should also prevent capital and remittance payments from fleeing the country.