The plunge of the Turkish pound is causing many people in the country to turn to Bitcoin and stablecoin-type cryptocurrencies such as Tether, whose exchange rate is partly linked to that of the dollar.
This move is recorded as the Turkish national currency is still very weak against the dollar with the exchange rate reaching 13.57. While the pound fell sharply especially in the last quarter of 2021, Turkish pound cryptocurrency trading volume jumped to an average of $ 1.8 billion a day in three cryptocurrency exchanges, according to analyst firm Chainalysis, cited by The Wall Street Journal. .
These trading volumes are still modest compared to the results of the 2019 survey of the Bank for International Settlements, which recorded about $ 71 billion in transactions in Turkish lira per day, but are the highest of each of the previous five quarters, the US newspaper reports.
The Turkish pound has plunged so sharply against the dollar that many citizens of the neighboring country now seem willing to take the biggest risk involved in buying such cryptocurrencies. Residents of Turkey have been trying for years to deal with the financial crises that occur by changing their money into US dollars, euros and gold. It is indicative that since September the pound has lost 40% of its value against the dollar.
Cryptocurrencies are a recent new refuge, although these placements remain high risk due to very strong price fluctuations. Bitcoin initially jumped almost 40% against the dollar in early November, but has now fallen more than 10%. In Istanbul, Turkey’s largest city and financial capital, ads for cryptocurrency exchanges are everywhere – on trams, billboards and at one of the city’s two airports, the WSJ reports.
Due to the ongoing economic crisis in recent years, two thirds of Turkey’s bank deposits are foreign currencies, with most of them being dollars and euros.
The Central Bank
However, this trend has attracted the interest of its central bank, which is constantly trying to support the pound. Now that the national currency is steadily declining even after these interventions, many Turks have begun to worry and believe that an economic crisis is inevitable.
In the worst case scenario, many fear that the government in Ankara could force banks to convert residents’ foreign currency deposits into pounds. To avoid this danger, tens of thousands of Turks are turning to cryptocurrencies, according to the same sources.
Of course, Ankara is not sitting idly by. Mustafa Elitas, deputy leader of the ruling Justice and Development Party (AKP) parliamentary group, has denied allegations that a 40% tax on cryptocurrency profits will be levied, according to Hurriyet. But a bill to regulate local cryptocurrency exchange platforms is expected to be submitted to the Turkish Parliament in the coming weeks, the Turkish newspaper reported.
Parliament will have the final say, he said, having already met with representatives of cryptocurrency platforms operating in Turkey. Senior officials from the Ministry of Finance, the Banking Regulation and Supervision Agency (BDDK), the Financial Crimes Investigation Council (MASAK) and the Turkish Central Bank also attended the meeting.