Introduction of Turkey's New Crypto-Asset Regulations
On July 2, 2024, Turkey's Grand National Assembly enacted the much-anticipated crypto-asset regulations initially proposed in May 2024. These regulations, published in the Official Gazette, are set to transform the crypto landscape in Turkey by introducing a series of licensing, compliance, and transaction requirements for crypto-asset service providers.
Overview of Regulatory Requirements
Under the new regulations, crypto-asset service providers will now be regulated by the Capital Markets Board (CMB). The regulations mandate a transition period during which service providers must meet specific declaration obligations within one month of the regulations coming into force.
The CMB is tasked with establishing principles for the issuance, sale, and distribution of crypto-assets, including trading, initial offerings, exchanges, transfers, and custody. Service providers must adhere to additional principles related to share capitals, employees, share transfers, information systems, and technological infrastructures.
Categories of Regulated Crypto-Assets
The new regulations cover a wide range of crypto-assets:
Security Crypto-Assets: These include rights exclusive to securities.
Electronic Money Crypto-Assets: Designed for electronic payments.
Utility Crypto-Assets: Provide access to services or products or evidence of ownership, such as non-fungible tokens (NFTs).
Primary Crypto-Assets: Based on distributed ledger technology, including Bitcoin and Ethereum.
Compliance and Licensing Obligations
All agreements between crypto-asset service providers and their clients must be in written form. Contractual terms that limit the liability of service providers are deemed invalid. Additionally, crypto trading platforms and custody services operating in Turkey are required to pay annual fees amounting to 2% of their total trading income. This requirement extends to platforms based abroad if their activities target Turkish residents. Such platforms must cease their operations within three months unless they obtain a Turkish licence.
Turkey’s existing currency control laws will continue to apply to all crypto-asset transactions, though the specifics of implementation remain unclear.
Penalties for Non-Compliance
Strict penalties have been established for unauthorised crypto-asset activities. Individuals and representatives of entities engaging in unauthorised service activities may face imprisonment of three to five years and judicial fines up to TRY5 million. Service providers and their staff are also liable for damages resulting from unlawful activities or failure to fulfil payment or delivery of crypto-assets.
Looking Ahead
Turkey’s proactive approach to regulating crypto-assets aims to create a secure and transparent environment for crypto transactions. As these regulations take effect, the country's crypto market is expected to evolve, offering new opportunities and challenges for service providers and users alike.
For further details and updates, please refer to CMS Law-Now and STEP International News.
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