Despite being one of the most active and preferred countries for crypto service providers and crypto asset projects, Turkey has not regulated the crypto market, yet.
This is about to change very soon and the new law will entrench Turkey's position as a crypto-friendly country.
The final touches are being made on a draft amid great expectations of mainstream financial institutions such as banks and brokerage houses, as well as crypto market service providers. This time such expectation is met by the highest ranking government official, the Minister of Finance and Treasury Mr. Simsek and he has heralded that the relevant law would be enacted very soon.
Turkey has been on the Financial Action Task Force's ("FATF") gray list since October 21, 2021. Mr. Simsek considered it a necessity to introduce a functional and modern crypto regulation in Turkey to address some of the concerns raised linked to the FATF's gray list.
Here is what we expect from the new regulation:
The new regulation focuses on identifying, categorizing and licensing the crypto market service providers such as exchanges, custody services, wallet services, brokerage activities, OTC trading and etc.
The Capital Markets Board of Turkey ("CMB") will be the regulatory agency to issue the licenses, supervise and monitor the market and activities of the crypto market service providers.
The license requirements will focus on ensuring high technical abilities and cyber resilience, financial good-standing, corporate governance and administrative good-standing and good compliance of the service providers. Providing crypto assets related services without a license will be subject to administrative and criminal fines and sanctions.
The new law allows "security tokens" and crowd-funding with token projects subject to CMB licensing and leaves the detailed regulations to the CMB. Hence, we expect that soon after the law is enacted CMB will be busy with drafting regulations on the detailed categorization of crypto assets and requirements to launch them.
Based on the distinctions between e-money tokens, security tokens, utility tokens and etc, different regulatory agencies may have jurisdiction to issue the relevant licenses and regulate ICOs.
The prospective law and the secondary regulations would regulate remote user onboarding process, which is crucial to resolve the discord between privacy regulations and AML regulations.
Tax matters related to the crypto asset market activities will not be addressed in the new law.
We expect that the crypto market actors and investors will see Turkey as a crypto native country with reliable and predictable crypto regulations.
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