Regulation
New Turkish Crypto Bill Aims to Improve FATF Compliance
On May 16, Turkey’s ruling party submitted a crypto bill to parliament. The bill focuses on licensing and registration of crypto service providers, aiming to align with international standards and improve Turkey’s position with the Financial Action Task Force (FATF), the global watchdog for money laundering and terrorist financing.
Turkey was downgraded to the FATF gray list in October 2021 due to its failure to implement adequate anti-money laundering measures in the banking, real estate and other sectors vulnerable to money laundering. Countries on the gray list must actively cooperate to correct deficiencies and are subject to increased monitoring.
Legislation to regulate crypto service providers
The proposed legislation aims to regulate cryptocurrency trading platforms and other service providers in the sector, requiring them to obtain a license from the Capital Markets Board (CMB) of Turkey. The CMB will be authorized to create secondary regulations and establish guidelines for service providers and crypto asset transactions.
Need for stricter crypto regulation
The project also highlights the need for stricter crypto regulation to mitigate risks, especially given recent bankruptcies of smaller trading platforms. Ankara, the Turkish capital, has been working on crypto legislation for over two years.
According to a Reuters report, the bill aims to update existing laws and comprehensively govern the crypto market. It covers all aspects of governance of crypto asset service providers, operations of the crypto asset platform, storage of crypto assets and transactions of purchase, sale and transfer of crypto assets by the Turkish residents. Key focus areas include consumer protection, platform transparency and compliance with financial regulations.
Inclusion of FATF Travel Guidelines
The proposed legislation also includes the travel guidelines published by the FATF. These guidelines require crypto companies and financial institutions involved in the sale of digital assets, collectively known as virtual asset service providers (VASPs), to obtain and share accurate information about the originator and the beneficiary with VASP counterparties or other financial institutions before or during transactions.
Earlier, sources told Reuters of a meeting between the FATF team and Turkish officials ahead of the release of a much-anticipated report in June. The government hopes for an upgrade from the FATF following the implementation of the new regulations.
In summary, the Turkish crypto bill aims to improve its regulatory framework and align with international standards in order to improve its position with the FATF. The bill’s focus on licensing, regulation, and compliance with FATF guidelines reflects the country’s commitment to mitigating risks and promoting transparency in the crypto sector.