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Bitcoin price drops after Turkey bans cryptocurrency payments

PARIS, FRANCE - APRIL 14: In this photo illustration, a visual representation of the digital Cryptocurrency, Bitcoin is on display on April 14, 2021 in Paris, France. The value of Bitcoin (BTC) has exceeded the threshold of 64,000 dollars for the first time in history. The Cryptocurrency overtakes the British Pound to become the 6th largest currency in the world. The total bitcoin market now represents $ 1.2 trillion, while that of all cryptocurrencies stands at $ 2251 billion. (Photo illustration by Chesnot/Getty Images)
Demand for cryptocurrencies in the country has been driven up recently by inflation pressures and a weaker Turkish Lira. The country's annual inflation rose above 16% in March. Photo: Chesnot/Getty Images

The price of bitcoin (BTC-USD) descended from record highs on Friday following a decision by Turkey's central bank to ban cryptocurrencies for payments.

The Central Bank of the Republic of Turkey (CBRT) said the use of cryptocurrencies and other crypto assets based on distributed ledger technology would be prohibited as a payment, whether directly or indirectly.

The ban will come into force from 30 April this year.

"Payment service providers will not be able to develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance, and will not be able to provide any services related to such business models," CBRT said in a statement.

The CBRT said the ban was motivated by a lack of "central authority regulation" and "supervision mechanisms" for cryptocurrencies and other similar digital assets.

It said that, among other risks, cryptocurrencies "may cause non-recoverable losses for the parties to the transactions" due to the lack of regulation.

A statement from the bank added that payments could "include elements that may undermine the confidence in methods and instruments used currently in payments."

Bitcoin was down over 3% to $61,379 (£44,670) in morning trade in London.

Chart: Yahoo Finance
Chart: Yahoo Finance

Demand for cryptocurrencies in Turkey has been driven up recently by inflation pressures and a weaker Turkish Lira. The country's annual inflation rose above 16% in March.

Prior to the announcement, Turkish authorities had last week demanded user information from trading platforms.

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Cryptocurrency prices have hit record highs in recent weeks thanks to a rise in demand.

Bitcoin, which has been up and down over the last few weeks, crossed another record high on Wednesday, touching $64,717.01.

On Thursday, Ethereum (ETH-USD) — the world's second biggest cryptocurrency — continued its multi-month rally, hitting a record high of $2,488.07. It was down nearly 2% on Friday morning.

On Wednesday, cryptocurrency exchange Coinbase became the first crypto firm to list on the Nasdaq (^IXIC).

Coinbase, the largest cryptocurrency exchange in the US, was briefly worth over $100bn when it debuted on the Nasdaq on Wednesday. Shares ended their first day of trading at $328.28, below the opening price of $381.

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