For context: Turkey has been facing an several year long financial crisis with the Turkish Lira plummeting in value.
Erdoğan has done nothing good to solve the crisis and is just firing the central bank administrator one after the other.
The central bank has brought so much lira with its foreign currency reserve to try to maintain the price that it is almost running dry of any foreign currency, making the future look even bleaker.
Because of this, the population has been rushing in putting their money in other currency/assets (like euro, gold, dollar, ...), which is making the situation worse, so the government has been actively trying to force people to keep their money in lira and even buy more lira if they can.
So whatever they say about it, it is just another move in this direction. They want to prevent people from buying cryptocurrency and further risking depreciating the lira.
Also with gold. Some news headlines: "Turkey tightens regulation of jewellers after demand for gold soars", "Turkey's Erdogan repeats call for citizens to convert forex, gold holdings".
But the article specifically mention payments, not investment.
The way I understand it, you can buy and sell cryptocurrencies and store your money into Bitcoin instead of lira. However you can't say, "I will sell you this for X BTC", instead you have to sell it for Y lira (or euros, dollars, ... I suppose). How the buyer gets the money and what the seller does with it, including selling/buying cryptocurrencies is not part of the payment process, what matters is that there is no BTC on the bill, and presumably, the payment has to be traceable.
How it relates to currency stability, I don't know, but it looks more like an anti money laundering / tax evasion law.
"The central bank has brought so much lira with its foreign currency reserve to try to maintain the price that it is almost running dry of any foreign currency, making the future look even bleaker."
All it needs to do is stop doing that and make it clear to the market that it will no longer do that. That removes the patsy from the market and the currency will find its level.
What you have to do is make lira scarce. And you do that by putting taxes up, stop paying interest on lira savings, and putting into administration any firm borrowing in foreign currency but earning in lira, and then refinancing them with lira loans.
All of which is the precise opposite of the view suggested by the "Washington Consensus".
Unfortunately Erdogan is a sound finance guy. Like Putin he thinks money is gold coins and that we're playing some D&D game.
He needs to understand its about the flow of money, not the stock. People holding savings in Gold, Crypto or dollars is a benefit to the lira economy, since it means lira will flow more freely and rapidly increasing economic velocity.
The interest rates set by the Turkish central bank are so high I honestly can't even comprehend why anyone would flee the Lira. You lose 17% to inflation but you also get back 19% from interest. The problem isn't the currency. The problem is that nobody wants to invest into a corrupt regime, people are fleeing Turkey, not the Lira. If Turkey was a trustworthy nation the US government could just purchase Turkish government bonds and solve the problem in an instant.
It hasnt‘t to be banned officially to be banned effectively. - Here in Germany buying and owning crypto currencies is not illegal. But try to transfer only 20k Euros from your bank account to Kraken.com to buy some crypto assets. Then you might get a letter from your bank telling you they just cancelled your bank account, without telling you why. And they will refuse to explain anything. - Trying to get background infos from insiders on reddit, you‘ll hear that there are departments focusing on money laundering that get noticed whenever largish amounts are being transfered to crypto marketplaces. And that their prefered action is to quit an account instead of investigating details.
In the end you realize that it‘s officially not forbidden, but that you rather don‘t touch these assets.
This is the world we are in 2021. Officially these are measures trying to prevent money laundering and tax evasion, but eventually we wake up in a pretty darn restrictive world where you can‘t even transfer 10k euros from A to B without having to explain things. (If and when you get the chance to explain.)
Another article about cryptocurrencies, another comments thread where I shake my head at the Cryptozealots spouting "It's the solution to everything! Resistance is futile! You will be assimilated!".
I read something interesting about this behavior a while ago, if you've put money into crypto, of course you're going to be cheerleading it, nobody puts money in something expecting to lose it (oh wait... I can see the /r/wsb crowd raising their hands). And the more people you recruit into your ponzi scheme, the more profit you stand to gain, so consciously or not, you'll be trying to convince everyone to get in on this whole scheme.
On the flipside, the skeptics are convinced it's a bubble that can implode any time and that the argumets "it will replace fiat and central banks!" are just silly delusions. And yes this is how I think. To be honest, I like money too, and I wished I had put some money in BTC. Someone's going to reply "Sour grapes!" under here, but still, I'm in the opinion, the rise of BTC is irrational.
Then again, it can be argued that the current world economy is also running on galactic amounts of irrationality...
>Cryptozealots spouting "It's the solution to everything! Resistance is futile! You will be assimilated!".
is a pretty unusual sentiment on HN. In the comments above I only saw a couple of mildly positive ones.
It's true people do tend to talk their book as it were. I feel I'm semi neutral as I've bought a bit in the booms and sell it when it seems to have peaked.
The truth is probably somewhere in the middle. It won't replace fiat but it's also not going away in a hurry.
> the rise of BTC is irrational.
Yeah but humans are irrational creatures. Life itself is kind of irrational. You muck around a while then die and try to have fun while doing so. Crypto is quite fun.
>To be honest, I like money too, and I wished I had put some money in BTC.
Never too late! ETH is probably going up some more.
While I can't substantiate it, I also have the feeling that current crypto hype is unnatural and kind of a bubble. It looks like a lot of fiat money is flowing into crypto and one must wonder where this money is coming from. One obvious source is the overblown money supply of FED/ECB (with claimed reasons the COVID crisis). While initially some of this money must have been poured into things like SP500 (judging by the rapid index recovery in 2020), then it probably found a more fertile ground in the volatility of crypto markets and people's savings followed the hype (somewhat reminiscent of large scale ponzi scheme).
Money supply and the resulting inflation does not serve a good purpose to fiat in the long run, because it diminishes its ability to serve as a store of value. If its other abilities (unit of exchange and accounting) are undermined, fiat will be in real trouble. So, I guess a crypto bubble serves a good purpose as a sort of a buffer for the inflation. In other words, if lots of people lose fiat money on a crypto bubble, there will be less money lost due to inflation for the ordinary folks. Replace crypto with stock, property and other bubbles and you basically get the same effect.
So I guess what the Turkish government is doing is diminishing the ability of crypto to serve as a unit of exchange. If they don't do it, they might very well lose control of their monetary system. That is, all financial transactions (except maybe taxes) bypassing their local currency and leading to even more inflation and a default (or some kid of war).
The whole financialized economic system is running on irrational exuberance and is frothy as hell. We could have a collapse in trust and a deflationary shock would send valuations to the ground but that is unlikely to happen because that would threaten the whole financial system, including the bond market. It's almost like the cryptocurrency market is the perfect scheme to take advantage of this situation. The game must go on and the central banks know it, that's why whenever there's a hiccup in the credit markets they intervene. So have fun everyone!
Regardless of the irrationality of current valuations, the cypto asset industry is here to stay and it will slowly syphon more use cases from the traditional financial system. The overall trend is real, just like the Internet trend in 2000 was real, regardless of the subsequent crash. Position yourself accordingly.
This has nothing to do with Crypto, or Istanbul not understanding how Crypto markets work. Citizens of Turkey could exchange their Liras freely (cash) on the many small exchanges that exist.
If I was there, I would know that these days are over; and capital/exchange controls are just a few days (weeks at most) of being implemented.
>In a statement explaining the reason behind the ban, the bank said these assets were "neither subject to any regulation and supervision mechanisms nor a central regulatory authority," among other security risks.
Why politicians still think that if they ban something then it will magically go away? As if people will think "oh it's banned, I guess I'll stop using it then". It's another weapon against the poor, as those people are the ones who feel consequences of such actions (good example is the war on drugs - poor people are in jail, rich bankers powder their noses as they please).
> Why politicians still think that if they ban something then it will magically go away?
But it probably would. Not completely, but few people would risk putting their life savings or any significant amount of money into something that was illegal.
> Why politicians still think that if they ban something then it will magically go away?
because people don't like to go to jail
> "oh it's banned, I guess I'll stop using it then"
that's exactly what's gonna happen in Turkey though.
But even if it wasn't Turkey which is ruled by an autocrat, a ban would steer away casual users that usually means the thing banned won't succeed in the long run.
imagine if YouTube was banned in some country and the ban would stay even after public protests (admitting that public protests were allowed)
YouTube usage would immediately drop to a number very close to zero.
A regulatory move in the same direction from the US wouldn't be that surprising, by the end of this year.
Also an overlooked detail in the article: "Last week, Turkish authorities demanded user information from crypto trading platforms." Your BTC can be an asset that can be seized as part of a confiscation procedure –also in Turkish law... Seriously, not your keys not your money. DEX is under-appreciated in this ecosystem.
Whatever naysayers may think, it looks like the "BTC as a store of value" case is pretty strong if even dictatorial govts are feeling the need to act against it (and Turkey isn't the first, see Venezuela and their various attempts at taking BTC down).
"BTC, timeless store of value, as acknowledged by many dictators around the world" (tm)
The risks cited may have to do with the irreversibility of transactions and the lack of a deposit guarantee scheme when using cryptocurrency.These are valid concerns.
This will however not help with their financial crisis, because the national issuing of money and collection of taxes is still in Turkish Lira. All payment by the government for goods and services is in Lira and needs to be converted to cryptocurrency and all cryptocurrency needs to be converted back to Lira to pay taxes.
Considering lots of miners are from China, no what you've read is not completely true. What's true is that Chinese users have no easy/legal way to convert between crypto and fiat (other than mining, that is).
Please can we regulate the carbon use of cryptocurrencies. This is getting out of control and governments are too slow. Bitcoin mining consumes more energy than the entire country of Argentina uses now.
I do not want to hate on Bitcoin but climate change is getting out of control and there is little time left to reverse course. Last year with a global pandemic CO2 still rose by near record amounts. Bitcoin mining does have something to do with this. There is a connection. Please be open to the idea that we need to regulate the energy that Proof of Work mining cryptocurrencies use. I don't want to stop crypto. I just want us to use types that require less energy to mine.
The planet is running out of time and this is FACT offsetting lots of progress on reducing emissions. https://www.esrl.noaa.gov/gmd/ccgg/trends/gr.html
Please don't downvote because you love crypto. I do too. I just want us to do better at preventing CO2 emissions from rising because of its mining.
[+] [-] maeln|4 years ago|reply
Erdoğan has done nothing good to solve the crisis and is just firing the central bank administrator one after the other.
The central bank has brought so much lira with its foreign currency reserve to try to maintain the price that it is almost running dry of any foreign currency, making the future look even bleaker.
Because of this, the population has been rushing in putting their money in other currency/assets (like euro, gold, dollar, ...), which is making the situation worse, so the government has been actively trying to force people to keep their money in lira and even buy more lira if they can.
So whatever they say about it, it is just another move in this direction. They want to prevent people from buying cryptocurrency and further risking depreciating the lira.
[+] [-] fisf|4 years ago|reply
[+] [-] ctafur|4 years ago|reply
[+] [-] GuB-42|4 years ago|reply
The way I understand it, you can buy and sell cryptocurrencies and store your money into Bitcoin instead of lira. However you can't say, "I will sell you this for X BTC", instead you have to sell it for Y lira (or euros, dollars, ... I suppose). How the buyer gets the money and what the seller does with it, including selling/buying cryptocurrencies is not part of the payment process, what matters is that there is no BTC on the bill, and presumably, the payment has to be traceable.
How it relates to currency stability, I don't know, but it looks more like an anti money laundering / tax evasion law.
[+] [-] neilwilson|4 years ago|reply
All it needs to do is stop doing that and make it clear to the market that it will no longer do that. That removes the patsy from the market and the currency will find its level.
What you have to do is make lira scarce. And you do that by putting taxes up, stop paying interest on lira savings, and putting into administration any firm borrowing in foreign currency but earning in lira, and then refinancing them with lira loans.
All of which is the precise opposite of the view suggested by the "Washington Consensus".
Unfortunately Erdogan is a sound finance guy. Like Putin he thinks money is gold coins and that we're playing some D&D game.
He needs to understand its about the flow of money, not the stock. People holding savings in Gold, Crypto or dollars is a benefit to the lira economy, since it means lira will flow more freely and rapidly increasing economic velocity.
[+] [-] cheaprentalyeti|4 years ago|reply
[+] [-] nly|4 years ago|reply
Historical context: https://tradingeconomics.com/turkey/interest-rate
[+] [-] vbezhenar|4 years ago|reply
[+] [-] bilekas|4 years ago|reply
[+] [-] matheusmoreira|4 years ago|reply
Why would anyone want to hold a depreciating fiat currency when even dogecoin increases in value? They should just stop fighting it and let it happen.
[+] [-] imtringued|4 years ago|reply
[+] [-] submeta|4 years ago|reply
In the end you realize that it‘s officially not forbidden, but that you rather don‘t touch these assets.
This is the world we are in 2021. Officially these are measures trying to prevent money laundering and tax evasion, but eventually we wake up in a pretty darn restrictive world where you can‘t even transfer 10k euros from A to B without having to explain things. (If and when you get the chance to explain.)
[+] [-] bellyfullofbac|4 years ago|reply
I read something interesting about this behavior a while ago, if you've put money into crypto, of course you're going to be cheerleading it, nobody puts money in something expecting to lose it (oh wait... I can see the /r/wsb crowd raising their hands). And the more people you recruit into your ponzi scheme, the more profit you stand to gain, so consciously or not, you'll be trying to convince everyone to get in on this whole scheme.
On the flipside, the skeptics are convinced it's a bubble that can implode any time and that the argumets "it will replace fiat and central banks!" are just silly delusions. And yes this is how I think. To be honest, I like money too, and I wished I had put some money in BTC. Someone's going to reply "Sour grapes!" under here, but still, I'm in the opinion, the rise of BTC is irrational.
Then again, it can be argued that the current world economy is also running on galactic amounts of irrationality...
[+] [-] tim333|4 years ago|reply
is a pretty unusual sentiment on HN. In the comments above I only saw a couple of mildly positive ones.
It's true people do tend to talk their book as it were. I feel I'm semi neutral as I've bought a bit in the booms and sell it when it seems to have peaked.
The truth is probably somewhere in the middle. It won't replace fiat but it's also not going away in a hurry.
> the rise of BTC is irrational.
Yeah but humans are irrational creatures. Life itself is kind of irrational. You muck around a while then die and try to have fun while doing so. Crypto is quite fun.
>To be honest, I like money too, and I wished I had put some money in BTC.
Never too late! ETH is probably going up some more.
[+] [-] kavalg|4 years ago|reply
Money supply and the resulting inflation does not serve a good purpose to fiat in the long run, because it diminishes its ability to serve as a store of value. If its other abilities (unit of exchange and accounting) are undermined, fiat will be in real trouble. So, I guess a crypto bubble serves a good purpose as a sort of a buffer for the inflation. In other words, if lots of people lose fiat money on a crypto bubble, there will be less money lost due to inflation for the ordinary folks. Replace crypto with stock, property and other bubbles and you basically get the same effect.
So I guess what the Turkish government is doing is diminishing the ability of crypto to serve as a unit of exchange. If they don't do it, they might very well lose control of their monetary system. That is, all financial transactions (except maybe taxes) bypassing their local currency and leading to even more inflation and a default (or some kid of war).
[+] [-] lifty|4 years ago|reply
Regardless of the irrationality of current valuations, the cypto asset industry is here to stay and it will slowly syphon more use cases from the traditional financial system. The overall trend is real, just like the Internet trend in 2000 was real, regardless of the subsequent crash. Position yourself accordingly.
[+] [-] ur-whale|4 years ago|reply
https://www.youtube.com/watch?v=sZHCVyllnck
Sorry, couldn't resist.
[+] [-] sekai|4 years ago|reply
[+] [-] cblconfederate|4 years ago|reply
replace crypto with $TSLA or $XXXX , people will try to justify their whatever decisions
[+] [-] adhoc32|4 years ago|reply
[+] [-] csomar|4 years ago|reply
Two weeks ago: https://www.dailysabah.com/business/finance/turkey-demands-u...
Two days ago: https://ahvalnews.com/turkey-gold/turkey-tightens-regulation...
This has nothing to do with Crypto, or Istanbul not understanding how Crypto markets work. Citizens of Turkey could exchange their Liras freely (cash) on the many small exchanges that exist.
If I was there, I would know that these days are over; and capital/exchange controls are just a few days (weeks at most) of being implemented.
[+] [-] rozularen|4 years ago|reply
That's exactly what they made for, duh
[+] [-] gregoriol|4 years ago|reply
[+] [-] geniium|4 years ago|reply
They are printing too much money for the rich and not helping/saving anyone and want to block all from getting away.
That's probably not gonna work. Banning something has proven to never work in history.
[+] [-] lxgr|4 years ago|reply
By definition there are lots of banned things in every legal system, and I'd argue many of them for very good reasons.
What's usually ineffective is banning something without providing a viable alternative.
[+] [-] varispeed|4 years ago|reply
[+] [-] kasperni|4 years ago|reply
But it probably would. Not completely, but few people would risk putting their life savings or any significant amount of money into something that was illegal.
[+] [-] hosteur|4 years ago|reply
[+] [-] africanboy|4 years ago|reply
because people don't like to go to jail
> "oh it's banned, I guess I'll stop using it then"
that's exactly what's gonna happen in Turkey though. But even if it wasn't Turkey which is ruled by an autocrat, a ban would steer away casual users that usually means the thing banned won't succeed in the long run.
imagine if YouTube was banned in some country and the ban would stay even after public protests (admitting that public protests were allowed)
YouTube usage would immediately drop to a number very close to zero.
[+] [-] sureklix|4 years ago|reply
Also an overlooked detail in the article: "Last week, Turkish authorities demanded user information from crypto trading platforms." Your BTC can be an asset that can be seized as part of a confiscation procedure –also in Turkish law... Seriously, not your keys not your money. DEX is under-appreciated in this ecosystem.
[+] [-] ur-whale|4 years ago|reply
"BTC, timeless store of value, as acknowledged by many dictators around the world" (tm)
[+] [-] manfredz|4 years ago|reply
This will however not help with their financial crisis, because the national issuing of money and collection of taxes is still in Turkish Lira. All payment by the government for goods and services is in Lira and needs to be converted to cryptocurrency and all cryptocurrency needs to be converted back to Lira to pay taxes.
[+] [-] qwerty456127|4 years ago|reply
UPDATE: It's fun watching how this comment votes keep fluctuating up and down :-)
[+] [-] quickthrower2|4 years ago|reply
[+] [-] ur-whale|4 years ago|reply
Shame really, up until not long ago (before Erdogan) Turkey was a really nice place to visit and on its way up economically (and the food, yum).
But now, they're headed straight back to the dark ages.
[+] [-] asah|4 years ago|reply
[+] [-] pantelisk|4 years ago|reply
[+] [-] Jonnax|4 years ago|reply
Is that true?
With a lot of crypto activity happening in China, would a crackdown there cause a fall in the market?
[+] [-] Havoc|4 years ago|reply
Certainly not banned outright though. Parts of Chinese gov have actively invested cash into ICO-less projects
Blockchain in general is also on their five year plan - though at a regional level not the national five year plan
[+] [-] angio|4 years ago|reply
[+] [-] adhoc32|4 years ago|reply
[+] [-] varispeed|4 years ago|reply
[+] [-] singularity2001|4 years ago|reply
[+] [-] qwertox|4 years ago|reply
The US will then continue developing solution with and for it, eventually building the next big thing, revolutionizing a market.
Wouldn't that then place the EU in a position of a consumer until they can then catch up eventually, if that would even be possible?
[+] [-] villgax|4 years ago|reply
[+] [-] blondie9x|4 years ago|reply
[+] [-] crazypython|4 years ago|reply
Custodial solutions like Coinbase can be banned. Full nodes are much harder to ban.