Turkey To Review Crypto Licensing And Registration Draft Law

Turkey is set to discuss a draft law in its parliament this week which could impose licensing and registration obligations on crypto asset service providers. The proposed legislation seeks to establish requirements and responsibilities for platform management, define the range of services platforms can offer, and establish financial and operational standards.

The draft law aims to enhance Turkey’s compliance with the Financial Action Task Force (FATF), a global financial watchdog, according to a report from the Turkish Minute. 

In October 2021, the FATF downgraded Turkey to its “grey list” due to insufficient supervision of sectors susceptible to money laundering, including banking and real estate.

Countries on the “grey list” face increased monitoring and must collaborate with the FATF to address deficiencies.

Turkey prepares to introduce crypto regulations in 2024. Current rules, though light, include AML measures. With a burgeoning crypto market, Turkey aims to exit the FATF "gray list" and protect investors with upcoming legislation addressing exchanges, taxes, and more.

— BlockVoyager (@BlockVoyagerAIO) May 6, 2024

Turkish Parliament to Review Crypto Draft Bill

The Turkish parliament’s Planning and Budget Committee will review the draft law, consisting of 19 articles aimed at defining the legal status of crypto assets.

The Turkish government has been working on this legislation for over two years to regulate the crypto sector and mitigate risks, particularly following the bankruptcy of several smaller trading platforms, which left numerous users unable to access their funds.

Under the proposed law, cryptocurrency trading platforms and other companies in the sector would be required to obtain licenses from Turkey’s Capital Markets Board (SPK).

“The law regulates crypto asset service providers, the activities of crypto asset platforms, storage of crypto assets and crypto asset buying, selling and transfer transactions that people residing in Turkey can make,” the bill reads.

The legislation includes provisions mandating that crypto asset service providers secure their information systems according to specific technological criteria set by authorities.

Under the bill, the issuance, sale, and distribution of crypto assets would be regulated by the SPK to standardize processes and safeguard investors against fraud and market manipulation.

Unauthorized Crypto Providers to Face Prison Sentences

The draft law would also criminalize unauthorized crypto asset services, which would carry penalties of three to five years of imprisonment.

Existing crypto asset service providers would be given a transition period to comply with the new regulations. They would have the option to apply to the SPK within one month or decide to liquidate their operations within three months.

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Furthermore, per the report, the draft law emphasizes investor protection and market integrity. It would deem contracts that limit or remove the liability of crypto asset service providers toward their customers invalid.

The bill would also establish mechanisms to handle investor complaints and disputes, and measures would be implemented to prevent market-disruptive activities. The SPK would also regulate the principles and procedures for providing crypto investment advisory services.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.