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Turkey’s President’s Move Comes Amid An Inflation-Induced Financial Crisis

Cryptocurrencies are increasingly becoming a hedge against inflation, as several countries began exploring potential use cases, the last one being Turkey. Indeed, the president of Turkey, Recep Tayyip Erdoğan, directed the Justice and Development Party (AK Party) to explore and analyze new developments, including cryptocurrency and the metaverse.

During a Justice and Development Party’s central executive board meeting, Erdoğan added that cryptos are a sensitive subject and the party must do a good and meticulous study.

Former Turkish Minister of European Union Affairs and AK Party spokesperson, Ömer Çelik, emphasized that there are many issues that directly affect people’s lives and the economy.

„When all these issues are discussed, it will be seen that there are some threats as well as benefits. All of these need to be regulated legally. The president has also given instructions regarding the study of the legal infrastructure of these issues,” Çelik added.

Turkey’s move is the latest addition to countries, trying to bring regulatory clarity amid Russian president Vladimir Putin demands the government and central bank to work out a common position on crypto regulation, as well as turning Russia into a crypto mining destination.

“I would ask both the Government of Russia and the Central Bank to come to some kind of unanimous opinion during the discussion, and I would ask you to hold this discussion in the near future, and then report on the results that will be achieved,” Putin asked.

Also, Russia’s surplus of electricity in energy-rich Russia as well as the availability of a qualified workforce may become the nation’s main competitive advantage for crypto mining operations, especially after China launched a crackdown on the industry last year.

Meanwhile, countries that already turned towards cryptocurrencies are also facing pressure, as the IMF’s board has “urged” El Salvador to discontinue its Bitcoin tender status. El Salvador became the first nation to adopt Bitcoin as a legal tender, and despite the ongoing bullish momentum in the crypto space, continues to add Bitcoin to its stash.

The IMF’s call to El Salvador comes just two weeks after IMF economists stressed that cryptocurrencies “could soon pose risks to financial stability especially in countries with widespread crypto adoption.” Furthermore, the monetary institution criticized El Salvador’s native Chivo e-wallet, which showed stability problems since its inception, with some users even losing funds.

“Directors agreed on the importance of boosting financial inclusion and noted that digital means of payment—such as the Chivo e-wallet—could play this role, but, they emphasized the need for strict regulation and oversight of the new ecosystem of Chivo and Bitcoin,” the IMF report concluded.

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