Summary
- Following the devastating 6 February earthquake in Turkey and Syria, the crypto community has donated huge sums ($12 million at the time of writing) to the affected people.
- The Turkish government has relaxed regulations, allowing three crypto wallets to be opened, into which donations are being deposited.
- The situation mirror’s the response in the early days of the war in Ukraine and highlights how through swift deployment of much-needed funds, crypto’s near-real time transactions offer potential on-the-ground relief faster than traditional aid dispersal.
Overview
Collecting crypto donations is illegal in Turkey, but following the devastating double earthquake that struck south-eastern Turkey and northern and western Syria, popular Turkish singer Haluk Levent, lobbied the authorities to make an exemption. In response, the country’s Financial Crimes Investigation Board, MASAK, allowed three crypto wallets to be opened, prompting an influx of money to support relief efforts.
Within seven days of the disaster, local non-profit AHBAP, had received more than $3 million. Blockchain data platform, Chainalysis, estimated that more than $5 million had been donated to Turkey and Syria, while Elliptic suggested the number was double this. Currency exchange Binance pledged $5 million, while several crypto companies including Bitfinex, Keet, Synonym and Tether, collectively pledged TL5 million ($265,000).
Crypto was 20% of non-state aid to Ukraine
Using crypto to offer financial support in the face of major upheaval, be it war or natural disaster, has been a growing trend, but arguably, Ukraine set a new benchmark by highlighting what was possible on a larger, more sustained scale.
According to the Financial Times, “crypto represents at least one-fifth of overall non-state-mandated aid to Ukraine, marking the first time in history crypto has played a significant role in a major conflict.”
In the early days of the war, large numbers of crypto donations were made, with the government using them to fund equipment purchases. By August, Minister for Digital Transformation Mykhailo Fedorov Tweeted a list detailing the main items on which approximately $60 million in donations had been spent. The situation provided an insight into the real-world impact of crypto, if offered the right conditions.
The difference with the situation in Turkey is the attitude of the authorities. Although MASAK may have allowed crypto donations to be made, Turkey has laws in place that ban the use of cryptocurrencies and assets for purchases. It hasn’t lifted the ban following the current state of emergency. As a result, the only means by which crypto donations can currently be used is to convert them into the fiat currency.
One issue that has arisen is that in the case of an earthquake – and the scale of devastation over an estimated 50,000 square kilometres in the two countries – there will be areas where it is currently impossible to physically access banks and their services.
Crypto is supposed to work in real-time, getting the funding required to where it’s needed swiftly, often to locations where traditional banking options have failed.
Outlook for crypto in Turkey
Before the authorities curtailed the use of cryptocurrencies, Turkey was one of the world’s largest adopters of the technology, reflecting a mix of cultural and financial factors.
If the Turkish government decides to relax restrictions on the use of cryptocurrencies to support earthquake survivors, then crypto donations could prove a useful addition to humanitarian relief efforts.
The situation again underlines the need to assess what comes next. There is the argument that regulation could help shape the country’s sector in a way that meets the government’s expectations, while also serving those keen to use it. If regulation is heavy-handed, this can hinder the sector’s development.
While regulation can ensure responsible use, heavy-handed measures could hinder the sector’s development. As we look towards the future, it is important to continue assessing the role that crypto can play in addressing humanitarian crises and how they can be integrated into existing relief efforts.
