By Arun Kumar Shrivastav
The Indian government has once again deferred the proposed crypto bill as the winter session ended without the bill being introduced to the parliament. It’s believed that the government could not make up its mind on the content and direction of the bill. The government could not decide whether it should impose a ban on cryptocurrencies or let them function as legitimate entities by providing a legal framework. More importantly, it couldn’t decide whether it should favour cryptocurrencies, stay neutral to their growth and popularity, or oppose them as a destabilising force.
Just when India sought more time to think it through by holding wider consultations, Turkey’s president Recep Tayyip Erdogan has announced that his government will send a crypto bill to parliament for discussion. “The law is ready, we will send it to the Parliament soon without delay,” he told journalists in Istanbul on December 24.
For the past one year, Turkey has been facing extremely difficult times on the economic front. Its official currency Lira has seen its value dropping by half against the dollar since the beginning of the year, more acutely in the last 3 months. The inflation has been uncontrollable and the official figure puts it at 21.7 per cent in November 2021, while the unofficial estimate has it at above 60 per cent.
Due to the consistently growing inflation, the prices of staples and essential commodities are changing and becoming dearer every day, making it increasingly difficult for the people to live by their salary or pension.
According to analysts, Turkey’s economic condition spiralled downwards since 2014 when Erdogan took office as the President. The current crisis of high inflation is being attributed to a series of cuts in the interest rate that Erdogan believes will stimulate the economy hit by the pandemic-inflicted sluggishness.
However, the low borrowing cost has resulted in a massive supply of currency in the market, which is causing a fall in the value of the currency and inflation.
Why has Erdogan stuck with low interest rates? He says he doesn’t want the access to credit to become unattractive by keeping the interest rates high. Leading economists and businessmen in his country have criticized Erdogan’s insistence to keep the rates low. Political analysts believe that Erdogan’s eyes are set on the general elections in 2023.
On December 16, Erdogan increased the minimum wages by 50 per cent from 2,826 lira to 4,250 lira or from $182 to $275 a month. He also promised a new economic model for the country. His announcements, however, saw a dramatic rise in the value of lira that appreciated by 20 per cent. Applicable next year, the rise in minimum wages will impact 6 million people in a country of 84 million. The rise in minimum wages is equivalent to the fall in Lira’s value. Political analysts believe this move is again aimed at the elections next year. Rather, they think Erdogan might call for the elections earlier than they are due.
Meanwhile, hit by inflation, people in Turkey have turned to bitcoin and cryptocurrencies in a big way. They are reportedly investing in digital coins to protect the value of their money in the face of rising inflation. As per different crypto news sources, the daily crypto transactions in Turkey are well over 1 million. In April 2021, Turkey’s central bank had banned crypto trade but allowed people to hold digital coins.
At the time of banning cryptocurrencies, the Central Bank of Turkey had said that it’s developing regulations for the crypto industry and it doesn’t plan to prohibit them. The details of the crypto bill Erdgoan’s government is going to bring in parliament are not out yet. However, there is no doubt about the urgency and need for such a bill. The fact that Turkey is witnessing over a million crypto transactions every day is not lost on anyone, especially when the government looks helpless in controlling the inflation.
A New York Times report dated December 21 talks about inflation and price rise through the story of a Turkish family, and says, “They stopped buying meat a year ago and recently had to cut back on using their gas heater and cooking oil, and on snacks for the children.”
Another report in crypto news portal on December 25 proclaims the “death of the lira” in its headline before asserting “a massive spike in bitcoin, USDT activity in Turkey”.
The decision to defer the crypto bill in its current form by the Indian government is, therefore, a clever move on the part of the government, given its highly-publicised tough stance on the issue. In today’s time when the internet has reduced the world into a global village, trends don’t take long to spread from one part of the world to another. A government can’t afford to show unexplained aggression on any matter, far less on crypto which is a popular technology and a lot of people are extremely sensitive about it.
Rather than a straightjacket approach, the government’s stance on crypto needs to be more enlightened and nuanced. (IPA Service)