Istanbul, Turkey – Just off Istiklal Street, Istanbul’s busiest pedestrian alley, the casual passerby stops to glance at a screen displaying cryptocurrency prices in the NakitCoins window.

Only a handful of people enter the store, but the physical exchange, which allows them to buy or sell Bitcoin and other cryptocurrencies, is a physical example of how the struggling Turkish lira is propelling the popularity of virtual cryptocurrencies in Turkey, despite a recent history of outraged exchanges.

Interest in crypto among Turks, like the rest of the world, has grown over the years. But Turkey’s economic crisis has prompted millions of curious observers to invest their savings in Bitcoin, Ethereum and other coins. New converts are not simply lured by the investment promise of cryptocurrencies, which are subject to wild and volatile price swings. They see virtual currencies as a potential store of value to protect their economies as the lira is rocked by routs that saw the Turkish currency lose more than 40% of its value in the last year alone.

The growing appetite for crypto is the latest manifestation of the Turkish public’s search for reliable investments, said Cem Yilmaz, who founded NakitCoins in 2018 and has now opened three branches in the country.

“Turks are very interested in investment, it could be forex [foreign exchange], or gold, or now crypto,” he said.

Yilmaz launched NakitCoins to help crypto-curious people overcome their apprehensions about sinking their money into a new virtual investment vehicle via exchanges that only exist in ether.

Turks are very interested in investing.

Cem Yilmaz, Founder, NakitCoins

“We already had a lot of online exchanges in Turkey, so we thought ‘Why not have something physical, where people can come and ask questions and put a face to crypto, instead of just going online? ‘”, did he declare.

Most NakitCoins customers today are foreigners, Yilmaz said, as current regulations in Turkey make it difficult to use Turkish lira cash directly. But he and other players in the country’s crypto sector hope that new legislation in the works will allow them to operate more directly.

“Cryptolization”

Daily crypto transactions in Turkey had topped one million in March last year, according to data from Chainalysis and Kaiko seen by Reuters news agency.

The surge came after the pound took a turn following President Recep Tayyip Erdogan’s surprise dismissal of the country’s central bank chief in the same month. However, volumes started to decline in April, after the central bank announced it was banning the use of cryptocurrencies for payment. Then in late April, two Turkish cryptocurrency exchanges – Thodex and Vebitcoin – collapsed, wiping out the holdings of hundreds of thousands of users.

But cryptomania returned in the final months of last year, with trading volumes exceeding one million a day, after a series of central bank interest rate cuts in the face of soaring inflation has seen the value of the lira plummet.

Billboards and TV spots are increasingly advertising ways for the public to enter the crypto market, and on most TV channels, up-to-date Bitcoin values ​​are listed alongside the dollar. American and Euro.

Turan Sert, adviser to Paribu, Turkey’s largest online crypto exchange, said the increased awareness highlights how crypto is increasingly replacing foreign currencies or traditional stores of value like gold. as a hedge against a local currency whose value is clouded by uncertainty.

“In the past, it was dollarization, which meant that to avoid fluctuations in their currency, people kept their assets in dollars,” he told Al Jazeera. “Now the recent trend is called cryptolization.”

The recent trend is called “cryptolization”.

Turan Sert, Crypto Exchange Advisor

Paribu, which allows Turks to use their bank accounts to buy and sell crypto in Turkish lira, has seen its user base grow from around 1.5 million when it opened in 2021 to 5 million by now. the end of the year, while the average daily trading volume increased by $20 million. day in 2020 to over $500 million by the end of 2021.

And local exchanges like Paribu and BTCTurk aren’t the only option for the country’s growing legions of crypto investors. Global exchanges like Binance and Coinbase also operate in Turkey.

The exact number of investors in Turkey holding cryptos is difficult to estimate as not all exchanges have made their data public. But Sert says experts have estimated it to be between 10 and 11 million people.

“If cryptocurrencies in Turkey formed their own political party, they would be the third largest party in parliament,” said Sima Baktas, a cryptocurrency lawyer and co-founder of nonprofit CryptoWomen Turkey. lucrative organization that hosts crypto seminars and workshops to raise awareness.

Baktas, who estimates that at least 14 million out of Turkey’s population of 84 million now hold cryptocurrencies, said the increasingly popular trend is driven by a young population that is both familiar with the online world and eager to find a way to protect her savings. against the depreciation of the lira.

“It wasn’t difficult to adapt to the crypto industry because we already had such big potential,” she said. “After that, of course, came the Turkish lira, and the economic situation we have today, which is getting worse and worse, and people are trying to find a reliable financial instrument for their savings.”

Challenging bad publicity

Crypto’s popularity has exploded despite years of government warnings about the sector’s infamous volatility.

In 2017, officials warned the public that crypto was a speculative industry that was set to crash, while Turkey’s Directorate of Religious Affairs said Bitcoin and other cryptocurrencies were not allowed in the country. Islam, because they had no intrinsic value like gold and were too shrouded in secrecy. and subject to abuse by criminal networks.

If cryptocurrencies in Turkey formed their own political party, they would be the third largest party in parliament.

Sima Baktas, co-founder, CryptoWomen Turkey

The abrupt collapse of cryptocurrency exchanges Thodex and Vebitcoin last year was met with criminal charges and a flurry of reports about how Turks were cheated by the crypto craze.

But Baktas said negative publicity does not deter the public from joining the crypto industry.

“Even mainstream TV channels are talking about crypto now, and even when they are showing really bad news about crypto, Turks are more interested in crypto, because they don’t care about this bad news that presents it. like some sort of unreliable sector.”

Meanwhile, having already banned cryptocurrencies for payments, Turkish authorities are working on new legislation that would aim to better regulate the sector.

This month, Baktas and other crypto experts met with lawmakers in Ankara who are drafting new regulations that would streamline registration for new crypto exchanges and potentially allow exchanges like NakitCoins to buy and sell directly. Turkish lira crypto.

“The goal is to regulate the system, prevent malicious intentions, protect investors and prevent victimization,” Mustafa Elitaş, deputy leader of the ruling Justice and Development Party in parliament, said on January 6. .

Elitaş met with experts like Baktas and stock exchange representatives to discuss a new regulatory regime — a sign, Sert says, that the government is seriously considering the issue.

“He’s trying to understand the landscape, and it’s been helpful for him to talk to those community members, to better understand what the issues are,” Sert said.

Rumors have swirled in Turkey about what the new official crypto rules could include, such as imposing a 40% tax on crypto profits – which Elitaş has publicly denied.