Turkish Citizens Flock To Crypto While Searching For Stability

Turkish citizens flock to crypto while searching for stability as President Erdogan plans crackdown as lira turmoil enhances speculation in digital assets as we are reading more in our latest cryptocurrency news today.

The rise in interest in crypto and the scandal last year which saw the closure of the Turkish crypto exchange that left hundreds of customers unable to access their funds alarmed the authorities of the country that are now keen on regulating the sector. President Recep Tayyip Erdogan said a crypto law will soon be presented to the parliament and said that his governemnt is in the war against cryptocurrency. The governor of Turkey’s central bank said he is quite uncomfortable with the amount of money that enters into crypto assets.

The stress shared by global regulators that see crypto as volatile and speculative is only growing.
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Most have concerns about illicit activities like money laundering and terrorism financing that is facilitated by digital assets. The rise in the use of crypto-assets can dampen the impact of monetary policy decisions and can lessen the control of national currencies. China for example banned both BTC and its mining because of the concerns that it will lose control of the money flowing into crypto.

The popularity of BTC surged in countries that have volatile currencies and high inflation. Turkey has the biggest crypto transaction volumes in the Middle East with volumes surpassing 1500 percent compared with 2020 according to a report on the global adoption trends from the data provider chainalysis. The report said:

 “Research suggests that many in the Middle East have turned to cryptocurrency to preserve their savings against currency devaluation, a trend we see in other emerging markets like Africa and Latin America,” adding that research suggests “a highly significant relationship between lira devaluation and [the amount of] lira trading on cryptocurrency exchanges.”

While the Turkish citizens chose to protect themselves against the volatility of the lira by saving in EUR and USD, the data suggests that some of them are turning to stablecoins that are pegged to cryptocurrencies or other assets that serve as a bridge between digital coins and national currencies. The data from Elliptic shows that the Turkish Lira trading volumes surged 360% in the past six months of 2021 against Tether. CryptoCompare calculated that TL211BN or $15.8 billion worth of BTC was traded last year compared with TL20BN in 2020. Alissa Ostrove as the chief of staff at CryptoCompare said:

“Looking forward, we expect crypto adoption to increase in Turkey as uncertainty surrounds inflation of the lira.”