Bitcoin fell early Friday after Turkey’s central bank decided to ban the use of cryptocurrencies for payments from the end of the month.
The Central Bank of the Republic of Turkey (CBRT) cited a number of reasons for the ban, including a lack of ‘supervisory mechanisms’ and ‘central authority regulation’ for crypto assets.
It said market values can be “extremely volatile,” adding that digital wallets can be stolen or used unlawfully and that transactions were irrevocable.
The benchmark cryptocurrency BTCUSD,
Down 4% to $ 60,902, after hitting record highs of over $ 64,000 earlier this week ahead of the COIN of crypto exchange platform Coinbase,
IPO. Ether ETHUSD,
the world’s second most prominent crypto, also fell 3.9%.
“Payment service providers cannot develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and the issuance of electronic money, and cannot provide services related to such business models,” the new regulation said.
The CBRT said it made the decision amid an increase in the use of crypto assets to make payments.
Last month, Tesla Chief Executive Elon Musk said Americans can now buy a Tesla with bitcoin and people outside the US can do the same later this year. Electric car manufacturer Tesla TSLA,
said it acquired $ 1.5 billion worth of bitcoin in February and announced plans to use it as a form of payment as well. Online payment service PayPal PYPL,
also began letting US customers purchase items using cryptocurrencies in late March.
But the CBRT said payments on crypto assets carry “ significant risks. ”
“The use in payments is believed to cause non-recoverable losses to the parties to the transactions due to the above factors and they contain elements that could undermine confidence in methods and tools currently used in payments,” he said.
Turkey isn’t the only country looking to take tough action against digital assets. India reportedly proposes a law banning cryptocurrencies and criminalizing the trading or even holding of assets with a fine. The bill was included in a government agenda in January, which also referred to plans to create an official digital currency issued by the Reserve Bank of India. “The bill also aims to ban all private cryptocurrencies in India, but it allows certain exceptions to promote the underlying cryptocurrency technology and its use,” the agenda said.