Turkish government submits draft bill for cryptocurrency

On May 16, Turkey’s ruling party submitted a draft cryptocurrency bill to parliament. The draft law focuses on licensing and registration for crypto service providers, in accordance with international standards.

Updating existing legislation

According to a Reuters report, the bill aims to update existing legislation to fully regulate the cryptocurrency market. Key areas of focus are consumer protection, platform transparency and financial regulatory compliance.

The proposed legislation aims to regulate cryptocurrency trading platforms and other service providers in the sector. They are required to obtain licenses from the Turkish Capital Markets Board (CMB). The draft law focuses on the regulation of crypto asset service providers, the activities of crypto asset platforms, the storage of crypto assets and the purchase, sale and transfer transactions of crypto assets by Turkish residents. The classification of cryptocurrencies and projects is also covered to ensure compliance with existing financial regulations.

Important points of the bill

Some important points from the bill are:

• Crypto service providers must be licensed and regulated by the Capital Markets Board.
• Enhanced supervision by the CMB to protect consumer assets and ensure effective dispute resolution.
• Mandatory collection of revenue from crypto service providers by the CMB and the Scientific and Technological Research Council of Turkey.
• Ban on foreign crypto brokers to promote a locally regulated ecosystem.

Bringing Turkey in line with international standards

This move aims to bring Turkey in line with international standards and address the concerns of the Financial Action Task Force (FATF), thereby improving the security and reliability of the national crypto market.

The bill also proposes to include the travel guidelines issued by the FATF. The FATF Travel Rule requires cryptocurrency companies and financial institutions involved in the sale of digital assets – collectively known as Virtual Asset Service Providers (VASPs) – to obtain and share “accurate originator and beneficiary information” with VASPs of the counterparty or other financial institutions before or during transactions.

Turkey was downgraded to the “grey list” by the FATF in October 2021 for failing to implement anti-money laundering measures in its banking, real estate and other sectors. The FATF requires countries on the gray list to actively cooperate in correcting any shortcomings and subjects them to enhanced supervision.