Turks flock to cryptocurrencies in search of stability

Despite a master's degree and a permanent job, a bourgeois lifestyle has increasingly proven to be unreachable for Orhan, a 39-year-old Turkish web security expert, in recent years.

frustrated by his rapidly dwindling purchasing power, Orhan joined the millions of Turks last year, which, given the increasing inflation and the slump in the Turkish lira, flocked to cryptocurrencies.

"The lira is as volatile as a shit coin," he said, referring to the collective term among crypto enthusiasts for failed digital currencies. The Lira crashed by about $ 45 percent compared to the dollar in 2021. "If there are so many economic problems [in our country], people are looking for other ways to make money," said Orhan, who did not want his second name to be published.

With its initial investment of $ 1,500,

Orhan earned a profit of $ 4,000 and solved its profits to buy a new computer.

The increase in interest in cryptocurrency-and a scandal in the past year, in which a Turkish crypto exchange was suddenly closed, which caused hundreds of thousands of customers to have no access to their funds-has alerted the country's authorities who now want to regulate the sector.

President Recep Tayyip Erdogan has announced that a cryptocurrency law will soon be presented to Parliament. He said his government was in a "war" against cryptocurrency.

The Governor of the Turkish Central Bank said in a conversation with foreign investors in the past month that he was "uncomfortable" in view of the amounts of money that flow into crypto systems.

These fears are shared by global regulatory authorities that consider cryptocurrencies as a volatile and speculative. Many have concerns about illegal activities such as money laundering and terrorist financing, which are made possible by digital assets.

The increasing use of digital assets can dampen the effects of monetary policy decisions and reduce official control over national currencies. China banned both Bitcoin and his creation or breakdown, partly out of concern that it would lose control of money that flows into cryptocurrencies.

The popularity of Bitcoin has risen in a leap in countries with volatile currencies and high inflation. Turkey has the highest crypto transaction volume in the Middle East, where the volume rose by 1,500 percent last year compared to 2020, according to a report on global acceptance trends by the specialized data provider Chainalysis.

"Investigations indicate that many have turned to the Middle East of cryptocurrency to protect their savings from a currency devaluation, a trend that we observe in other emerging countries such as Africa and Latin America," said the research that research "a highly significant connection between lira devaluation and lira trade Cryptocurrency exchanges ”.

While the Turks have long decided to protect themselves against the volatility of the Lira by keeping their savings in dollars or euros, data indicate that some of them are turning to "stable coins" that are tied to hard currencies or other assets and functions between digital coins and national currencies.

Data from the cryptocurrency specialist Elliptic showed that the trade volume of the Turkish Lira rose by 360 percent in the last six months of 2021 compared to the most traded StableCoin Tether. Cryptocompare, a specialized data company, calculated that Bitcoin worth almost 211 billion TL (15.8 billion USD) were traded last year compared to only 20 billion TL in 2020.

"With regard to the future, we expect the introduction of crypto in Turkey to increase because the inflation of the Lira is unsure," said Alissa Ostrove, chief of staff at CryptoCommare.

The Turkish Central Bank announced a ban on the use of digital assets for payments last year. Recently, the country's banking supervision has instructed the lenders to prevent customers from being included in Lira to invest in Lira in order to invest in foreign currencies or crypto facilities. Although only a few details about the upcoming law were confirmed, experts said that it would probably be concentrated on the regulation of the crypto exchange.

"As far as I know, you look at a law that protects the user of cryptocurrencies," said Elcin Karatay, managing partner of the law firm Solak & Partners, who took part in consultations with deputies through the regulations. "I don't think they want to ban cryptocurrency."

A regulation would be positive for the industry if it "supports the sector, protects investors, contributes to the economy and ensures compliance with international markets," said Onur Altan Tan, Managing Director of Bitci, the Turkish cryptocurrency platform.

Some users fear that the government could try to prevent them from withdrawing the revenues of their investments from the Turkish banking system - even if this would be difficult to enforce.

At the moment, the view of regulation has little to do to reduce interest in Turkey. TV news channels present Bitcoin and Ethereum prices in addition to the dollar and euro changes. Half-time television spots at football games praise the advantages of the crypto exchange.

"When I talk about crypto, everyone - my hairdresser, my taxi driver, my waiter - ask: 'What do you invest in what do you invest?', said Sima Baktas, co -founder of cryptowomen turkey, who promotes the engagement of women in the world of cryptocurrencies. "Everyone is interested"

About a third of the approximately 2,000 participants in training their group are housewives, said Baktas. "They say, 'My husband earns less money and I want to invest in crypto'," she said.

The authorities have tried to lure people back to investments in Turkish lira with a new system that is supposed to protect savers from loss of exchange rate. According to analysts, such steps will probably not work as long as Erdogan remains fixed to keep interest rates far below inflation, which is officially 36 percent in December and is expected to continue to rise in the coming months.

Orhan, the crypto dealer, says that the government, instead of trying to regulate digital assets, should examine the actual causes of its attractiveness. "You should ask: Why are people interested in cryptocurrency? Why do you take this risk?" he said. "If there is no stability, people look for alternative solutions."