Turkey, known for its significant presence in the global cryptocurrency market, is anticipated to enact cryptocurrency-related legislation in the near future. While the specifics of the legislation remain undisclosed, Turkish Finance Minister Mehmet Simsek hinted at its nearing completion in January. However, despite expectations for the Turkish parliament to begin regulating the cryptocurrency space early in 2024, the draft legislation has yet to be unveiled.
Amidst the absence of formal cryptocurrency regulations, Turkey currently operates under relatively light regulatory measures concerning cryptocurrencies. Notably, the Central Bank of the Republic of Turkey initiated a regulation in 2021, barring cryptocurrency holders from utilizing digital assets like Bitcoin for payments due to their non-legal tender status. Additionally, there are anti-money laundering (AML) measures supervised by the Financial Crime Investigation Board (MASAK) of the Treasury Department, requiring exchanges to implement know-your-customer (KYC) procedures to prevent illicit activities.
Turkey’s Capital Markets Board (CMB), also known as SPK (Sermaye Piyasası Kurulu), has historically provided guidance related to cryptocurrencies. According to SPK, trading in cryptocurrencies is prohibited for individuals and institutions associated with the board, including banks and broker-dealers, based on guidance issued as early as 2018. Despite these regulations, Turkey boasts one of the highest cryptocurrency adoption rates globally, with Chainanalysis ranking it as the fourth-largest cryptocurrency market.
The impending cryptocurrency legislation in Turkey is expected to address several key issues, including compliance with Financial Action Task Force (FATF) guidelines to exit the “grey list” related to anti-money laundering measures. The legislation will likely focus on regulating and licensing cryptocurrency exchanges, defining their responsibilities, and ensuring investor protection. This legal framework is essential, especially in light of past incidents like the collapse of the Thodex exchange in April 2021.
Furthermore, Turkey’s crypto tax framework is anticipated to be established under the upcoming legislation, with plans to impose transaction taxes on cryptocurrencies. The government may require citizens to declare cryptocurrency income, albeit reportedly setting a zero withholding tax rate initially. Moreover, the legislation is expected to address regulatory concerns surrounding the tokenization of real-world assets. While the timeline for the enactment of Turkey’s crypto law remains uncertain, industry observers speculate its release may coincide with an upcoming meeting of the U.S. Office of Foreign Assets Control in June.
