Sam Reynolds

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                <li>The Turkish lira has depreciated by nearly 34% this year as President Recep Tayyip Erdogan’s plan to stabilize the economy backfired</li>
                <li>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</li>
            </ul>
    
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<p>Turkish President Recep Tayyip Erdogan has <a href="https://abcgazetesi.com/erdogan-kripto-para-yasasi-hazir-yakinda-gecikmeden-meclise-gonderecegiz-412268" target="_blank" rel="noreferrer noopener">announced</a> 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&#8217;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.&nbsp;</p>



<p>In March, <a href="https://cms.blockworks.co/turkish-bitcoin-interest-spikes-after-lira-devaluation-capital-controls/" target="_blank" rel="noreferrer noopener">Blockworks reported</a> that Google searches for bitcoin and other cryptocurrencies were up by nearly 500%. In April, <a href="https://cms.blockworks.co/turkey-bans-crypto-as-form-of-payment-bitcoin-price-drops/" target="_blank" rel="noreferrer noopener">Turkey banned crypto</a> 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.&nbsp;</p>



<h3 class="wp-block-heading"><strong>Turkey’s out-of-control inflation&nbsp;</strong></h3>



<p>Ergodan’s administration has taken a non-conventional approach to monetary policy, <a href="https://www.bloomberg.com/news/articles/2021-12-24/erdogan-says-turkey-won-t-again-tame-inflation-with-rate-hikes" target="_blank" rel="noreferrer noopener">refusing to raise interest rates</a> to combat surging inflation, instead preferring to maintain low rates in order to finance cheap borrowing.&nbsp;<br><br>“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.”</p>



<p>Inflation, though, has hit record levels, clocking in at 26% in November according to published statistics.&nbsp;</p>



<h3 class="wp-block-heading"><strong>Market remains stable</strong></h3>



<p><a href="https://www.tradingview.com/x/bsCvnc50/" target="_blank" rel="noreferrer noopener">On-chain data</a> from Turkey suggests the market doesn’t expect the bill Erdogan is readying for parliament to be overly restrictive.&nbsp;</p>



<p>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.&nbsp;</p>



<p>BTCTurkPro, one of the largest domestic exchanges, also reports steady volume, clearing an average of $300 million a day in transactions <a href="https://www.coingecko.com/en/exchanges/btcturk-pro#statistics" target="_blank" rel="noreferrer noopener">according to CoinGecko</a>. Volume spiked on December 21 to nearly $1 billion as the lira briefly rallied when Erdogan <a href="https://www.cnbc.com/2021/12/21/turkish-lira-whipsaws-from-historic-low-after-erdogan-announces-rescue-plan-.html" target="_blank" rel="noreferrer noopener">announced a plan</a> to protect depositors against currency fluctuations leading many traders to take profit against a recovered lira.&nbsp;</p>



<p>Unrelated to the upcoming crypto bill, Binance, which has a strong presence in Turkey and offers lira-denominated trading pairs, has been <a href="https://www.aa.com.tr/tr/gundem/turkiyede-kripto-varlik-platformlarina-yonelik-ilk-ceza-geldi/2457158" target="_blank" rel="noreferrer noopener">fined $750,000 by local authorities</a> for having insufficient money laundering controls in place.&nbsp;</p>



<p>Erdogan <a href="https://www.trtworld.com/magazine/why-turkey-is-now-turkiye-and-why-that-matters-52602" target="_blank" rel="noreferrer noopener">has also announced</a> 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.”</p>



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