Anika Begay
As the government works to create a more orderly legal environment for cryptocurrencies, Turkey is seeing a surge in digital currency license applications.
This trend, fueled by a combination of legal clarity and economic considerations, demonstrates how eager cryptocurrency companies are to operate in the country.
The continued devaluation of the Turkish lira and high inflation rates have prompted many people to look for other investment options, thus increasing the demand for cryptocurrencies.
Crypto: Development in regulations
Currently in the final evaluation stage, the Turkish government is requiring virtual asset service providers (VASPs) to obtain permits from the Capital Markets Board (CMB). This program aims to improve investor safety and provide a safe space for cryptocurrency trading.
CMB is keeping a close eye on things to make sure they follow the rules. This is very important to gain investor trust and move Turkey towards global norms.
Turkey ranks well in global adoption rates and has become one of the fastest-growing bitcoin markets in recent years. Reports say the country has seen an eleven-fold increase in cryptocurrency usage in the past year; many people are turning to digital assets as a hedge against economic uncertainty.
Turkey may not have comprehensive cryptocurrency laws at the moment, but there are rules to control the sector. In January, Turkey’s Finance and Treasury Minister Mehmet Simsek hinted that the country’s cryptocurrency draft was nearly complete. But the long-awaited bill is still missing from parliament.
Economic aspects that encourage adoption
Interest in cryptocurrencies has been sparked by the country’s economic situation. Many people are looking for new ways to protect their investments as inflation in August 2023 is over 60% and the value of money is at an all-time low. The fall of the lira has made cryptocurrencies a desirable avenue for diversification and savings.
According to Chainalysis, Turkey’s cryptocurrency market is the fourth largest in the world, with over $170 billion in trading volume. This puts Turkey’s bitcoin market ahead of Germany, Russia, Canada, Vietnam, and Thailand.
Paribu, a local cryptocurrency exchange, has seen an increase in trading volumes, particularly in stablecoins like USDT. Investors in Turkey often implement stablecoins as a way to mitigate currency risk.
This shift highlights a broader trend where individuals are increasingly using digital assets to protect their finances in difficult times, as well as for investment purposes.
The road ahead
Turkey is currently working on its cryptocurrency regulations, which shows that the sector has a lot of potential for the future. To encourage creativity and attract foreign capital, the government wants to make the system clear.
Meanwhile, the construction of the Istanbul Financial Center to encourage the spread of financial technology will create an ideal environment for the development of blockchain and bitcoin-related projects.
Featured image from Bloomberg, chart from TradingView
