As the government works to create a more orderly legal environment for cryptocurrencies, Turkey is seeing an increase in applications for digital currency licenses.

This trend, fueled by a combination of legal clarity and economic considerations, shows how eager cryptocurrency companies are to operate in the country.

The ongoing devaluation of the Turkish lira and high inflation rates have led many people to look for other investment opportunities, increasing the demand for cryptocurrencies.

Crypto: Development in Regulation

Currently in final considerations, the Turkish government is calling on Virtual Asset Service Providers (VASPs) to obtain licenses from the Capital Markets Board (CMB). This program is aimed at improving investor safety and providing a safe space for trading cryptocurrencies.

The CMB is monitoring the cases to make sure they are following the rules. This is very important to gain investor confidence and bring Turkey up to world standards.

Turkey ranks high in global adoption rates and has become one of the fastest growing bitcoin markets in recent years. Reports state that the country has seen an eleven-fold increase in crypto usage in the past year, with many turning to digital assets as a hedge against economic uncertainty.

Turkey may not have complete crypto laws yet, but it does have regulations to keep the industry under control. In January, Turkish Finance and Treasury Minister Mehmet Simsek hinted that the country’s crypto concept was nearly complete. But the long-awaited bill is still missing from parliament.

Economic aspects that encourage adoption

Crypto interest has been fueled by the country’s economic situation. Many people are looking for new ways to protect their investments as inflation is expected to exceed 60% in August 2023 and the value of money is at its lowest point. The falling lira has made cryptocurrencies a desirable way of diversification and saving.

According to Chainalysis, the Turkish cryptocurrency market is the fourth largest in the world with a trading volume of over $170 billion, putting the Turkish bitcoin market ahead of Germany, Russia, Canada, Vietnam and Thailand.

Paribu, a local cryptocurrency exchange, has experienced an increase in trading volumes, especially in stablecoins like USDT. Investors in Turkey often implement stablecoins as a way to mitigate currency risk.

This change underscores a general trend where people are increasingly using digital assets to protect their finances during tough times, in addition to for investment purposes.

The way forward

Turkey is currently working on its cryptocurrency regulations, which shows that the industry has a lot of potential for the future. In order to stimulate creativity and attract foreign capital, the government wants to make the system clear.

Meanwhile, the construction of the Istanbul Financial Center, which aims to boost the spread of fintech, will create an ideal environment for the development of blockchain and bitcoin-related projects.

Main image from Bloomberg, chart from TradingView