Turkey is facing a severe economic crisis, with soaring inflation, unemployment, and currency devaluation. The Turkish lira has lost more than 40% of its value against the US dollar in 2021, reaching a record low of 18.5 lira per dollar in November. The situation has been worsened by political instability and frequent changes in the leadership of the central bank.
In these challenging times, many Turks are turning to cryptocurrencies as a way to preserve their wealth and hedge against the lira’s volatility. According to data from Chainalysis, Turkey ranked fourth in the world in terms of crypto adoption in 2021, behind Vietnam, India, and Pakistan. The country also saw a surge in crypto transactions in March 2021, after President Recep Tayyip Erdoğan fired the central bank governor for the third time in less than two years.
Crypto enthusiasts in Turkey see digital currencies as a more reliable and accessible alternative to traditional financial systems, which are often subject to government interference and censorship. Crypto also offers a way to access global markets and participate in the growing decentralized finance (DeFi) sector, which provides various financial services without intermediaries.
However, the crypto boom in Turkey has also attracted some risks and challenges. In April 2021, two major crypto exchanges in the country, Thodex and Vebitcoin, collapsed amid allegations of fraud and embezzlement, leaving thousands of investors out of pocket. The incidents prompted the government to impose stricter regulations on crypto activities, banning the use of crypto for payments and requiring exchanges to report transactions above a certain threshold.
The new rules aim to protect consumers and prevent money laundering and terrorism financing through crypto. However, some crypto advocates fear that they could stifle innovation and limit the potential of crypto to empower people and businesses. They also argue that crypto regulation should be more transparent and participatory, involving input from various stakeholders in the industry.
Despite the regulatory uncertainty and market volatility, crypto remains a popular and growing phenomenon in Turkey. According to a survey by Statista, 16% of Turks said they used or owned crypto in 2020, compared to 8% in 2019. Crypto companies in Turkey are also expanding their operations and launching new products and services. For example, NakitCoins, the country’s first physical crypto exchange, opened three branches across Turkey since 2018. BtcTurk, the largest crypto exchange in Turkey, partnered with Yandex.Checkout, a Russian online payment service provider, to enable cross-border payments with crypto.
Crypto’s role in Turkey’s economy is likely to increase as the country faces more challenges and uncertainties ahead. Crypto could offer a way for Turks to diversify their assets, access new opportunities, and cope with the effects of inflation and devaluation. However, crypto also comes with risks and responsibilities that require education, awareness, and regulation. As Turkey’s crypto industry matures, it will need to balance innovation with protection, and autonomy with accountability.