Turkey has taken a significant step towards regulating the cryptocurrency market by drafting a crypto bill that aligns with international standards. The bill, tabled by Abdullah Güler, the Group Chairperson of the ruling party, covers various aspects of the crypto industry, including virtual asset service providers, trading platforms, asset storage, and transactions conducted by Turkish residents.
The proposed legislation, which prioritizes consumer protection and global standards, aims to bring Turkey’s crypto regulations in line with the Financial Action Task Force (FATF) standards. In order to operate in Turkey, all cryptocurrency service providers will be required to obtain licenses and register with the Capital Markets Board (CMB), the nation’s financial regulator. The CMB will also have expanded authority to protect consumer assets held by crypto service providers.
To ensure revenue collection and enforcement, the bill entrusts the CMB and the Scientific and Technological Research Council of Türkiye (TÜBITAK) with enforcement capabilities. The government’s priority is to foster a locally regulated ecosystem, and therefore, foreign crypto brokers will be prohibited from operating in Turkey without obtaining the necessary licenses and adhering to the proposed regulations.
The draft also incorporates the FATF’s “Travel Rule,” which mandates that cryptocurrency companies and financial institutions involved in digital asset transactions collect and share accurate information about the originators and beneficiaries of those transactions. This aligns Turkey’s crypto regulations with the global standards set by the FATF.
The move to strengthen crypto regulations in Turkey comes after the country was placed on the FATF’s “gray list” in October 2021 due to inadequate implementation of Anti-Money Laundering (AML) measures. The government’s urgency to regulate the crypto space was driven by a plan to protect the nation’s fiat currency, the Turkish lira, from the intrusion of cryptocurrencies.
Initially faced with opposition from Turkey’s crypto communities, the authorities later addressed their concerns. President Erdogan called for the regulation of the cryptocurrency industry in December 2022, but the introduction of a formal bill was postponed due to the leak of a draft crypto bill that sparked outrage on social media platforms.
To address the concerns of the public, government officials engaged with various Turkish crypto communities and convened a meeting at the Parliament in December 2022. The aim was to come to an agreement on a more inclusive regulatory framework.
Now, with the proposed comprehensive crypto regulatory framework, Turkey aims to balance citizen concerns while fostering a secure and reliable crypto market.
