The Turkish government, led by President Tayyip Erdogan, has submitted a draft law to parliament that aims to establish stringent oversight over cryptocurrency operations within the country. The legislation introduces mandatory licensing and registration requirements for crypto asset service providers, aligning with international standards to bolster Turkey’s standing with the Financial Action Task Force (FATF).
The proposed bill, crafted by Erdogan’s ruling AK Party, specifies that all cryptocurrency trading platforms and related businesses must obtain licenses from Turkey’s capital markets board. This move is part of a broader effort to address the deficiencies highlighted when the FATF placed Turkey on its grey list in October 2021. The listing pointed to inadequate supervision of sectors vulnerable to money laundering and terrorism financing, including banking and real estate.
Turkey’s placement on the grey list has necessitated increased scrutiny and active cooperation with the FATF to rectify oversight shortcomings. The draft law encompasses comprehensive regulations covering the activities of crypto asset platforms, including the storage, buying, selling, and transfer of crypto assets by residents. It delineates clear responsibilities for platform management and outlines the services these platforms can provide, alongside setting financial and operational standards.
This legislative initiative follows incidents where failures in smaller trading platforms resulted in substantial financial losses for investors, underscoring the need for enhanced regulatory measures. The law also grants the Capital Markets Board the authority to issue secondary regulations and establish procedures for overseeing crypto asset service providers and transactions.
The Turkish government has been working diligently on crypto asset legislation for over two years, aiming to mitigate risks and stabilize the sector. Earlier this month, a FATF team met with Turkish authorities, a precursor to a report due in June, where Turkey anticipates an upgrade in its FATF status. Successful implementation of the law could significantly improve Turkey’s international financial reputation and encourage more secure and structured growth in the burgeoning crypto market.
