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Watchdogs: Turkish Crypto Ban — Doubling Down On Hypocrisy

By CoinJoy | CoinJoy Magazine | 23 Jul 2021


Recep Tayyip Erdogan is a man of unorthodox economic views. He confronts mainstream macroeconomists by insisting that higher interest rates are “evil” and increase inflation when in fact they are widely known to reduce it. In 2018, he appointed his own son-in-law as the country’s finance minister, only to accept his resignation (followed by an unprecedented fall in the exchange rate of the Turkish lira) several years later. A true economic visionary he is, over the last two years Erdogan has also replaced 3 (!) central bank governors: apparently, their views as how to curb the raging inflation of lira didn’t live up to Recep’s vision.  

And speaking of the lira, as of late, Turkey’s national currency has not been feeling too well. It has recently hit a new historic low — as a matter of fact, it has been plummeting record lows for quite a while. As a response to that, Erdogan urges his people to purchase lira-based financial instruments as a means to support their domestic currency: instead of this, Turks are desperately trying to protect their savings from inflation by converting lira into real estate, foreign currencies, and gold. They’ve been also doing the same thing with crypto — up until the country’s central bank imposed a ban on payments in it this April. Here’s the catch: these people are shooting the wrong guy. 

The central bank’s rationalization for the ban is that cryptocurrencies are “too risky” of an asset for the people of Turkey to invest in. And yet, Turks themselves are not afraid of that risk: according to Chainalysis, Turkey boasts the highest cryptocurrency transaction volume in the Middle East. Moreover, prior to the ban, Turkey’s crypto userbase had been rapidly expanding: a recent survey from Turkish crypto exchange Paribu shows that the number of active crypto users among Turks has grown more than 11 times over the last year. 

That kind of growth is by no means surprising: Turks are hunting for opportunities to preserve and grow their money in the inflationary environment, so this newfound interest in crypto is perfectly natural. What’s unnatural is their government’s desire to choke off investor access to this asset, as if doing so would somehow allow to stabilize the Turkish lira.  

The fact of the matter is, the boom of cryptocurrency investment in Turkey took place in the wake of the lira slump and double-digit inflation, and if it wasn’t for inflation, Turks would not be that desperate to invest their weakened national currency in crypto in the first place. For most Turks, crypto is a safe haven for their lira savings, and not the menace bureaucrats portray it to be. They refuse to invest into lira-based instruments as their president and central bank advise them to, yet they happily plough money into crypto, which could mean only one thing: these people trust in crypto more than they trust their own government. 

The actual villain of this story is president Erdogan: after all, he’s the one at least partly responsible for making the decisions that led to the downfall of the Turkish lira (which in turn caused the popularity spike of crypto). Nonetheless, while this person keeps holding Turkish economy by the throat, the country’s officials continue to make the boogeyman out of crypto. Indeed, this is a shining example of state hypocrisy.


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