Turkey is expediting its efforts to regulate the cryptocurrency sector, following the European Union’s MiCA framework. The draft law, which was recently approved by the Parliamentary Commission, has now reached the General Assembly of the Parliament for further deliberation. This critical move aims to tighten regulations on digital assets and combat money laundering, a necessary step for Turkey to exit the FATF gray list. The definitions and regulations outlined in this draft will set new standards for crypto-related activities within the country.
What Does the Draft Include?
The draft law incorporates specific definitions related to cryptocurrencies within the Capital Markets Law, clarifying terms such as wallet and address. It aims to regulate platforms that provide crypto asset services and custody. By monitoring the issuance of crypto assets digitally, outside the Central Securities Depository (MKK) system, Turkey plans to oversee these activities more effectively.
What Lies Ahead for the Draft?
The General Assembly of the Parliament is expected to pass this draft law swiftly, as it needs to be enacted before the FATF meeting in June. The legislation aims to curb illegal activities and bring about a more structured crypto environment. Turkish authorities believe the entire process can be wrapped up within a few working days.
Ömer İleri, in his recent statements, assured that foreign exchanges would not face an outright ban and that taxation matters would be handled separately. There will be a specific study conducted to determine the tax rate applicable to investor transactions and earnings.
Key Insights for Investors
- Foreign exchange platforms will remain operational, but will be closely monitored.
- Tax regulations specific to cryptocurrency transactions will be detailed in a separate study.
- Global exchanges could face restrictions on Turkish investors for futures transactions.
- Local versions of global exchanges may be mandated, similar to the 2021 regulations.
A number of international cryptocurrency exchanges have already set up local branches in anticipation of these new regulations. However, it remains to be seen whether mandatory localization, akin to measures implemented in 2021, will be enforced. Additionally, future transactions may see more limitations for Turkish investors, potentially leading to sanctions for non-compliance.