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A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken March 15, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

Turkey’s central bank banned the use of cryptocurrencies and crypto assets to purchase goods and services, citing “irrepairable” possible damages and significant risks in such transactions.

In legislation published in the Official Gazette overnight, the Central Bank of Turkey (CBRT) said cryptocurrencies and other such digital assets based on distributed ledger technology could not be used, directly or indirectly, as an instrument of payment.

“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,” the bank said.

A growing boom in Turkey’s crypto market had gained further pace recently, with investors hoping to both gain from bitcoin’s rally and shelter against inflation.

A weaker Turkish lira and inflation pressures also have driven up demand for the cryptocurrency.

In a statement explaining the reason behind the ban, the bank said these assets were “neither subject to any regulation and supervision mechanisms nor a central regulatory authority,” among other security risks.

“It is considered that their use in payments may cause non-recoverable losses for the parties to the transactions due to the above-listed factors and they include elements that may undermine the confidence in methods and instruments used currently in payments,” the central bank said in a statement.

Last week, Turkish authorities demanded user information from trading platforms.

Turkey’s annual inflation climbed above 16% in March.

The legislation goes into effect on April 30th. Bitcoin fell 2.59% to $61,757 at 0557 GMT.

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