Turkey drafts crypto bills to align with international standards

Last updated: May 17, 2024 at 5:47 p.m. EDT | 2 minutes of reading

In a major move, Turkey has drafted a crypto law, tabled on May 16 by ruling party group (AK Party) Chairman Abdullah Güler, to regulate the cryptocurrency market in line with international standards.

The proposed legislation covers various aspects of the crypto industry, including virtual asset service providers (VASPs), trading platforms, asset storage, and transactions made by Turkish residents.

Main provisions set out in the Turkish crypto bill

Cryptonews reported earlier in the week that Turkey was plans to submit a project of its crypto regulations, which prioritize consumer protection and global standards. This happened after the Turkish government announced the imminent completion of the crypto regulatory framework to comply with Financial Action Task Force (FATF) standards in January 2024.

According to the draft, all cryptocurrency service providers operating in Turkey must obtain licenses and register with the Capital Markets Board (CMB), the country’s financial regulator.

The bill also grants the CMB expanded authority to protect consumer assets held by crypto service providers. This is very important because Turkey has developed over the years to become one of the largest cryptocurrency markets.

Furthermore, the bill addresses the issue of revenue collection by entrusting the CMB and the Scientific and Technological Research Council of Turkey (TÜBITAK) with enforcement capabilities.

The draft also highlights the Turkish government’s priority to foster a locally regulated ecosystem by prohibiting foreign crypto brokers from operating in Turkey without obtaining the necessary licenses and adhering to the proposed regulations.

The legislation notably aims to align Turkey’s crypto regulations with international standards set by the Financial Action Task Force (FATF), a global watchdog combating money laundering and terrorist financing.

The project integrates the The FATF “travel rule” which requires cryptocurrency companies and financial institutions involved in digital asset transactions to collect and share accurate information about the initiators and beneficiaries of those transactions.

Turkey strengthens its grip on the crypto market following FATF concerns

Turkey’s decision to strengthen its crypto regulations comes after the Financial Action Task Force (FATF) placed the country on its “grey list” in October 2021 due to inadequate implementation of Anti-Money Laundering (AML) Measures in various sectors, including banking and real estate.

The need for the government to regulate the crypto space became urgent in late 2022, driven by an ambitious plan to curb the intrusion of cryptocurrencies with the claim of safeguarding the country’s fiat currency, the Turkish lira.

The initiative, however, was met with opposition from Turkey’s crypto communities, leading to a media outcry that subsequently forced authorities to address their concerns.

Despite President Erdogan’s vocal calls in December 2022 to regulate the cryptocurrency sector, the introduction of a formal bill has been postponed.

The first catalyst for the negative reaction was the crypto bill leaked was reportedly supported by the ruling Justice and Development Party (AKP), sparking outrage on social media platforms due to concerns over possible restrictive measures.

In response to widespread public outcry, government officials, including former AKP deputy ministers and senior officials from agencies including the Central Bank and the Treasury, have called a meeting in Parliament in December 2022 to hold a dialogue with various Turkish crypto communities.

The dialogue aimed to address public concerns and reach agreement on a more inclusive regulatory framework.

Now that Turkish authorities have proposed a comprehensive crypto regulatory framework in line with Financial Action Task Force (FATF) guidelines, Turkey seeks to balance citizens’ concerns while fostering a safe and reliable crypto market.

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