Turkey, known for being one of the largest cryptocurrency economies in the world, is set to introduce crypto-related legislation later this year. Despite the anticipation, the draft legislation has not been released yet, leaving many wondering about the current status of crypto regulation in Turkey. To shed light on the situation, Cointelegraph spoke to industry experts in the country.
Although there is no official crypto legislation in Turkey, there are some existing regulations that lightly govern the market. The Central Bank of the Republic of Turkey implemented a regulation in 2021 that prohibits crypto holders from using cryptocurrencies like Bitcoin (BTC) for payments, as they are not considered legal tender. However, since this regulation was not passed by the parliament, the consequences and penalties for violating it are unclear.
Another regulation in place relates to Anti-Money Laundering (AML) measures and is overseen by the Financial Crimes Investigation Board, also known as MASAK. This regulation requires crypto exchanges to collect Know Your Customer (KYC) data from users to prevent illicit activities such as money laundering and terrorism financing. Additionally, the Capital Markets Board of Turkey (CMB) has issued guidance stating that anyone related to the authority, including banks and broker dealers, should not trade cryptocurrencies.
Turkey is a significant player in the global crypto market, ranking fourth in terms of estimated trading volume, with approximately $170 billion. This puts Turkey ahead of countries like Russia, Canada, Vietnam, Thailand, and Germany. The country has also seen a significant increase in crypto adoption, with studies indicating that 40% of Turkish citizens hold cryptocurrencies. It is estimated that there are around 20 million cryptocurrency investors in Turkey, out of a total population of 85 million.
The introduction of crypto regulations in Turkey is expected to help the country exit the Financial Action Task Force’s (FATF) “gray list” by addressing Anti-Money Laundering (AML) measures. The FATF requires countries to comply with its framework to prevent virtual assets from being used for criminal activities.
The upcoming crypto legislation in Turkey will primarily focus on regulating and licensing crypto exchanges, defining their liabilities and responsibilities. It will also establish standards for the safe custody of crypto assets to ensure investor protection. The legislation is also expected to provide a legal foundation for crypto taxes in Turkey, with low-rate transaction taxes and the requirement for citizens to declare their earnings on crypto.
The exact timeline for the release of Turkey’s crypto legislation is uncertain. While some expect progress to be made early this year, it is possible that the introduction of the law will coincide with the upcoming meeting of the U.S. Office of Foreign Assets Control in June. The law will likely need to be passed and in effect before Turkey can be removed from the FATF’s “gray list.”