The Turkish Finance Minister announces that he will submit a draft law for the regulation of cryptocurrencies. Companies in the country can expect legal certainty – but also strict requirements.
According to the Reuters news service, Turkey is tightening the regulation of cryptocurrencies. The country is reacting to the fact that in 2021 the Financial Action Task Force (FATF) placed it on the gray list of countries that are not combating money laundering decisively enough.
Finance Minister Mehmet Simsek said Turkey complies with 39 out of 40 FATF standards, according to a FATF report. “The only outstanding issue is the scope of technical compliance regarding crypto assets.”
Therefore, according to the Finance Minister, “a draft law on crypto assets will be brought to parliament as quickly as possible. After that, there will no longer be any reason to leave Turkey on the gray list.” However, Simsek did not give any details about the draft.
At least you can find some further information in Turkey’s annual presidential program for 2024, which appeared at the end of October. An article in the almost 500-page document mentions the planned studies to define crypto assets and then tax them properly. Exchanges and other crypto service providers should also be legally defined. But this document is also silent on details of the planned regulation. However, it can be assumed that the FATF requires Turkey to follow the usual procedures, including the infamous “Travel Rule”, which, due to its technical complexity, represents a significant challenge not only for Turkey.
There is continued high interest in cryptocurrencies in Turkey, which reached a peak in 2021. As a rule, this interest is fueled by the high inflation of the Turkish lira. According to surveys, every second citizen in Türkiye owns cryptocurrencies.
However, from a regulatory perspective, the industry continues to hover in no man’s land, where it is not banned, but also not allowed. This lack of rules exposes the crypto community to the mercy of the government, which spontaneously banned the use of cryptocurrencies as a means of payment around mid-2021.
Companies therefore have no clear guidelines on how they must behave. On the one hand, the stock exchanges are free from the regulatory requirements that plague them in the EU and especially Germany; on the other hand, they always have one foot in prison. For example, Faruk Fatih Özer, the founder of the Thodex stock exchange that collapsed in 2021, was sentenced to an absurdly long prison sentence of almost 12,000 years after his arrest in Albania.
Since President Erdogan has already declared “war” on Bitcoin in 2021, little leniency can be expected from the coming regulations.