Turkey accelerates cryptocurrency adoption as the nation attempts to detach economic ties from the US and regenerate an economy facing potential recession.
Bitcoin, blockchain and the wider crypto world are by no means perfect but during times of economic unrest and uncertainty, people seek out alternative solutions. And those who serve the people, the governments, do the same. Both have very different agendas in mind however.
This week, I spoke with Emre Aksoy and Jonathan Leong. Both are key players in helping the country accelerate cryptocurrency adoption: Emre Aksoy, a strategic advisor to Turkish government bodies on crypto adoption and regulation, as well as Jonathan Leong, CEO of BTSE, the leading cryptocurrency exchange which recently listed the digital Lira, the BiLira.
Cryptocurrency adoption is on the rise in Turkey as the economy continues to plummet. Increased tension with the US, investor distrust and Turkey’s financial reserves running out have led the Lira to tumble to its lowest level in history this year.
Turkey has dramatically increased resources into blockchain and cryptocurrency technology to save the economy from recession. More than two thirds of the country declare they are positive about cryptocurrency adoption and one of the key ways people are using this technology is through recently introduced cryptocurrency debit cards.
Along with experimenting with a Central Bank Digital Currency (CBDC), Turkey is investing in blockchain research, encouraging youth to study blockchain tech and supporting tech-based businesses in an attempt to save the economy without relying on external resources.
More than 30% of Turkey remain unbanked and debit card solutions are enabling the unbanked to skip the bank – crypto can assist in financial inclusion, particularly for the states in the East where dangerous conflict inhibits banks from setting up shop.
Crypto is now as easy to access as gold and cash from one of the oldest markets in the world at Istanbul’s Grand Bazaar.
“Turkey’s political situation and volatile exchange rate has led Turkish people to become the leading adopters of cryptocurrencies, because crypto enables easy access to wealth, borderless payments and reliable hedges against inflation. Crypto debit card adoption is a logical evolution of economic instability and the digital asset space”, says Leong.
Aksoy noted that, “3-4% of all countries’ GDP is being wasted on transaction costs and banking intermediaries. Cryptocurrency technology will cut these costs and reduce our reliance and dependency on other nations. Turkey now has a real shot at saving its economy.”
“The Turkish government are trying to figure out alternatives to the SWIFT system. This is public knowledge”, says Aksoy. The government are exploring CBDCs while also investigating potential membership of the Russian version of SWIFT, known as SPFS. New tech like blockchain and cryptocurrencies naturally are being looked at simultaneously. Despite traditionally having strong ties to the United States, the government is now showing some real teeth and making it known that there are other ways to do business. Turkey realizes the strategic significance of the country in the global market. This is no longer political posturing. This is serious business.
Aksoy believes crypto can help both the government and the Turkish people find a united path forward, one which can be mutually beneficial. The irony is not lost on him however, acknowledging that such tech can help avoid censorship and any other government agenda. “This isn’t a quick make money scheme. It has the potential to protect the people and the wealth of the nation, if implemented and welcomed with open arms”, says Aksoy.
Is Turkey Really Ready To Embrace Crypto?
Turkey has a young population with a median age of 31.5 years, so adoption of new tech is higher than most of Europe. More than 90 percent of adults have a smartphone and mobile internet users are north of 50 million. This demographic is a part of the rapidly growing cryptocurrency adoption. ING Bank hosted a survey back in 2018 and the results showed that 18% of the population already owned some sort of cryptocurrency, and another 25% was interested in purchasing some. Given the current climate, it would be interesting to see how these numbers have changed in just two years.
One must not discount the noble effort of the Turkish government in doing a complete U-turn on it’s original stance on crypto back in 2017. At first, the government was against all things crypto-related. In 2018, President Erdoğan’s son in law, Berat Albayrak, became the Finance Minister and issued an annual prosperity plan. The plan had statements about using blockchain technology and exploring new direct investment methods such as Initial Coin Offerings (ICO’s). And since last year, the government is sponsoring university programs, launching blockchain labs, providing incentives to businesses willing to research topics like blockchain and cryptocurrencies.
However, all new innovations can be perceived to be a double-edged sword. It’s all about perspective. Despite supporting such academic initiatives, the government see crypto as clear and present dang