The Turkish Lira (TRY) has become the third-largest fiat currency to be used for cryptocurrency trading.
According to a report from Kaiko Research, TRY’s growing market share has pushed it past the euro (EUR), capturing 19% of the market share. This was an all-time high for the currency, hit in early June.
Turkey has been grappling with inflation since 2022. The growing market share has been attributed to this, peaking at over 70%, severely eroding the value of the lira.
With Lira becoming one of the worst-performing fiat currencies, Kaiko researchers believe Turkish citizens have been turning to cryptocurrencies as a hedge. The trend has been witnessed in jurisdictions undergoing similar economic conditions.
The report also attributes the change to foreign exchange volatility, which is another driver for crypto adoption.
Over the past months, there has been a lot of volatility in foreign exchange markets. This has been fuelled by divergent monetary policies and a record number of elections in 2024, per Kaiko.
Japan’s Yen dropped to a 30-year low against the US dollar. The Mexican Peso fell to its lowest level since Oct. 2023. Meanwhile, the British pound (GBP) rallied to its highest level in two years against the EUR.
All of these currencies have seen their purchasing power weaken.
Kaiko also considered Binance’s recent regulatory hurdles to be a factor contributing to Lira’s growing market share.
The cryptocurrency exchange lost several banking partners over the past years due to increased regulatory scrutiny.
Last year, Paysafe, Binance’s partner that handled GBP deposits, cut ties with the platform due to regulatory uncertainty in the United Kingdom. Soon after, the platform cut its ties with Australian bank Westpac, which handled AUD (Australian Dollar) deposits to Binance.
As a result, the platform had to delist GBP and AUD trading pairs.
Kaiko suggests this resulted in a lot of the market share to transition to TRY, pushing its volume.
TRY’s growing prevalence in the cryptocurrency sector comes as the nation is eyeing crypto regulations.
Turkey’s ruling party chairman, Abdullah Güler, has proposed a bill that will install various frameworks for crypto service providers. Under the proposed law, the Capital Markets Board (CMB) will also have increased oversight of the crypto sector.
The bill would also introduce licensing measures for crypto firms in a bid to boost the nation’s compliance with international standards regarding crypto assets.
A move that is expected to eliminate criticism from the Financial Action Task Force (FATF), which has kept the nation on its “grey list” list since 2021.
As crypto.news reported earlier, Turkey’s Finance Minister Mehmet Şimşek has also revealed that a taxation framework is underway. With this, the country tax gains from investments in cryptocurrencies.
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