• The Turkish lira has depreciated by nearly 34% this year as President Recep Tayyip Erdogan’s plan to stabilize the economy backfired
  • Authorities are looking to clamp down on crypto after continued interest from Turks as a way to preserve wealth in the face of a weakening lira

Turkish President Recep Tayyip Erdogan has announced that a long-awaited bill regulating digital assets is ready, according to reports in local media. The contents of the bill have not been made public, but it’s expected to be hostile to digital assets, which have been growing in popularity in Turkey as the value of the country’s lira currency has slumped in recent months. 

In March, Blockworks reported that Google searches for bitcoin and other cryptocurrencies were up by nearly 500%. In April, Turkey banned crypto as a form of payment. It remains legal to hold the asset although regulators frequently cite crypto as a form of evasion for capital controls and taxes. 

Turkey’s out-of-control inflation 

Ergodan’s administration has taken a non-conventional approach to monetary policy, refusing to raise interest rates to combat surging inflation, instead preferring to maintain low rates in order to finance cheap borrowing. 

“We’ve put aside the classical understanding of economics that keeps inflation under control with high interest rates,” Bloomberg quoted Erdogan as saying. “We will witness a different economic climate through summer once the financial stability is ensured.”

Inflation, though, has hit record levels, clocking in at 26% in November according to published statistics. 

Market remains stable

On-chain data from Turkey suggests the market doesn’t expect the bill Erdogan is readying for parliament to be overly restrictive. 

The valuation of the Turkish lira against the stablecoin tether is continuing to track the official TRY-USD exchange rate, suggesting traders aren’t trying to dump tether before local exchanges and their ramps get shut down. 

BTCTurkPro, one of the largest domestic exchanges, also reports steady volume, clearing an average of $300 million a day in transactions according to CoinGecko. Volume spiked on December 21 to nearly $1 billion as the lira briefly rallied when Erdogan announced a plan to protect depositors against currency fluctuations leading many traders to take profit against a recovered lira. 

Unrelated to the upcoming crypto bill, Binance, which has a strong presence in Turkey and offers lira-denominated trading pairs, has been fined $750,000 by local authorities for having insufficient money laundering controls in place. 

Erdogan has also announced a change in the country’s name from Turkey to Turkiye, explaining that it reflects “the culture, civilisation, and values of the Turkish nation in the best way.”

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  • Blockworks
    Sam Reynolds is a Taipei-based reporter, covering digital assets and regulation throughout Asia. Before joining Blockworks he was an editor at Forkast News and an analyst with IDC.