What Does PayPal’s Shutdown in Turkey Mean for Bitcoin?

PayPal

has been forced to cease operations in Turkey. The shutdown will go
into effect on June 6. Turkey recently denied PayPal of a new
license, which is required to operate within the country.
According to TechCrunch

, the reason for the denial was that PayPal does not localize all
of their IT infrastructure inside of Turkey.

To get a clearer picture of what’s going on in Turkey,
Bitcoin Magazine

reached out to
Emre
Kenci

, CTO and co-founder of
BTCTrader

, which owns and operates Turkish Bitcoin exchange
BTCTurk

.

Will Other Online Payment Providers Leave
Turkey?

According to Kenci, PayPal’s reasons for leaving Turkey may also
apply to other payment providers. Then again, others are able to
earn exemptions. “Businesses like
Western
Union

have been exempt from the law,” said Kenci.

“If the business is holding funds on behalf of the consumer, for
the purpose of allowing the consumers to transfer money to other
consumers or businesses, then the business needs an electronic
money license,” explained Kenci. “If the business does not hold any
consumer funds but allows businesses to accept payments, then they
need a payment processor license. Electronic money license holders
are allowed to operate as payment processors. So the latter license
is a subset of the former. Each business is evaluated by the
regulator on a case-by-case basis.”

Kenci also noted the regulation goes far beyond the reported
requirement to keep all IT infrastructure within the country’s
borders. “Everything from the organization chart to the CV of the
CEO, from the paid capital of the business to how funds are held in
bank accounts, [and] financial and security audits are within the
scope of the regulation. And there are specific rules for each,” he
explained.

Kenci added that all of these requirements create a barrier to
entry for small businesses who wish to experiment with new,
innovative ideas.

In terms of Kenci’s own business, he holds the view that the
activities of BTCTurk do not fall within the scope of this law.
“The regulation’s scope is holding and allowing the transfer of
funds in currencies recognized by the central bank of Turkey,” he
explained. “The regulator has
deemed

that bitcoin is out of this scope.”

Can Bitcoin Help for International Transfers?

Although there has been a large amount of hype around the use of
Bitcoin for international money transfers and remittances, real
data on this sort of use case is not yet widely available.
According to Kenci,
SWIFT

is the most popular method of sending money abroad, especially for
amounts larger than $1,000.

“The banking infrastructure in Turkey is quite efficient, the
digital channels (mobile, web) work well, and the transfer costs
are below international rates,” explained Kenci. ”

Remittance

companies, such as Western Union, are also well established and are
available as embedded services in almost every bank.”

Where Can Bitcoin Help?

According to Kenci, PayPal was mainly helpful for transfers of
small amounts of money and digital payments in Turkey. “We believe
that this presents a good opportunity for Bitcoin,” he added.

Although Kenci said the recent PayPal news has helped with the
PR presence of Bitcoin in Turkey, he also added that the maturity
of Bitcoin services in Turkey and the rest of the world are not yet
at a level where the technology can fill a void left by PayPal.
Having said that, he also noted, “It is certain that the Turkish
user base of PayPal will struggle to find a direct
replacement.”

In terms of where Bitcoin is useful in general, Kenci explained,
“The interest in Bitcoin, as we saw in Greece via our partner
BTCGreece

, increases when the existing financial infrastructure does not
function, when there are strong
capital controls

or when people lose trust in national currencies as we currently
see in China.”

According to Kenci, the financial infrastructure is strong in
Turkey, and despite having weakened in the last year and a half,
the Turkish lira continues to instill trust in a large part of the
population as a store of wealth.

mm

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