Can Erdogan’s promise of crypto regulation in Turkey save its falling lira

Many crypto experts and analysts predicted that 2022 would bring a surge in crypto regulation and laws. On 1 January 2022, this already seems to be the case as one country seemingly prepares the ground to rapidly release a crypto bill.

Turkey runs to regulation

As the New Year dawned, Turkish people around the world reacted to President Recep Tayyip Erdogan’s demand that Turkish people maintain their savings in the Turkish lira. The announcement comes as the country struggles against rising inflation due to the depreciating currency – which at one point fell by 7% in mere minutes.

The Turkish lira has weakened against the USD by ~16% since the start of the week. This confirms that TCMB wasted $8bil of dwindling FX reserves last week to prop up the pathetic lira for nothing. The ONLY way out for the lira is with a #CurrencyBoard. pic.twitter.com/jNazblOgVh

— Steve Hanke (@steve_hanke) December 30, 2021

However, is it possible that this call to return to a native currency signals upcoming crypto regulations in the country? In the final days of 2021, the Daily Sabah quoted the president as saying that the law to regulate cryptocurrency was ready. What’s more, speed seems to be of the essence. According to reports, Justice and Development Party (AK Party) Group Deputy Chairperson Mustafa Elitaş, stated,

“The common opinion of the participants is that the law must be enacted as soon as possible.”

As the lira plunged during 2021, the international media noted that Turkish people were converting their savings to gold, foreign currencies, and even crypto to safeguard their wealth. In light of this development, an urgent crypto bill and a subsequent call for converting wealth back to the lira make sense. What’s more, a tax on crypto is a possibility.

While initial reports on the bill don’t seem to hint at a blanket ban, Hürriyet Daily News reported that the draft law could lead to fining or even imprisoning crypto “service providers” who don’t obtain permission to operate.

According to Elitaş, around five million people from the country have accounts on cryptocurrency platforms.

All in all, if Turkey plans to enforce its crypto regulation bill in 2022, world events and political statements suggest this could happen sooner rather than later.

Nobody wants a Binance Christmas here

Binance didn’t have a very merry Christmas 2021 as Turkey’s Financial Crimes Investigation Board [MASAK] hit the crypto exchange with a $750,000 fine. This was because Binance reportedly violated the country’s crypto exchange platform laws by not handing over the user details regulators wanted.

Special legislation for crypto platforms in Turkey came into force in Spring 2021. However, the December penalty is a sign that Turkey might be preparing to regulate its crypto sector more strictly.