Erdogan’s war against Bitcoin

Recep Erdogan – the firebrand Turkish president – has declared war on Bitcoin.

In the aftermath of a sweeping ban on the use of cryptocurrencies back in April, the leader is aiming to assert financial control ahead of launching the digital Lira.

While the central bank was not opposed to the utilisation of digital currency, Erdogan believes it faces conflict with cryptocurrencies.

“We are in a war against Bitcoin,” he said.

“Because we will continue on the road with our money, which is our fundamental identity in this matter.”

The president commented during a national youth meeting with representatives from 81 Turkish provinces, following questions about the central bank’s perceptions of cryptocurrencies.

Many Turks have turned to cryptocurrency as a hedge on the volatility of the Lira in forex markets, and crypto has become a hot topic in Istanbul ahead of the proposal of new legislation aiming to regulate cryptocurrencies.

Regulations will pave the way for the full implementation of the digital Lira, which Erdogan’s government is aiming to launch by 2023.

Why is Erdogan against Bitcoin?

The move to launch a digital currency governed by the Central Bank of the Republic of Turkey (CBRT), in partnership with the Scientific and Technological Research Council of Turkey (TÜBITAK), has been driven by an explosion in the popularity of crypto in the country.

The wave of adoption can be traced back to the 2018 Turkish debt crisis, which saw the country’s credit rating drop through the floor.

As the value of the Lira plummeted by 10%, cryptocurrency purchase volume in Turkey surged by 60%.

A recent poll found that around 20% of Turks engaged with cryptocurrencies either in payment transactions or as personal investments in 2020.

The crisis drove the long-serving Erdogan to put together a new economic development framework to recover the Turkish economy by 2023.

Proposals for a digital Lira CBDC form a key part of this plan, with the aim of providing the CBRT monetary controls over the exponential explosion in cryptocurrency usage.

With the Turkish government eager to take control of fleeting capital and remittances, it seems Erdogan has decided the best strategy to assert the supremacy of the digital Lira is through a war on other cryptocurrencies.

The legislation is intended to extend protections to investors in the volatile crypto markets – with the imposition of a tax regime models after the US and UK, alongside mechanisms earmarked to tackle money laundering.

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