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5 Things to Know Before It’s Introduced — TradingView News
The government of Turkey, one of the world’s largest cryptocurrency economies, is expected to introduce cryptocurrency-related legislation this year.
Turkish Treasury and Finance Minister Mehmet Simsek announced in January that local cryptocurrency legislation was almost complete. Many expected the Turkish parliament to begin regulating the cryptocurrency market in early 2024, but the bill has yet to be introduced.
As Turkey’s regulatory silence on cryptocurrencies may lead to questions about when the legislation will arrive and what the current state of cryptocurrency regulation in Turkey is, Cointelegraph spoke with some local industry enthusiasts to clarify some questions.
Turkey already has some “light” crypto regulations.
Although the Turkish government has yet to introduce legislation on cryptocurrencies, this does not mean that there are no rules to regulate the market in the country today.
According to local cryptocurrency mentor Ismail Hakki Polat, there are currently “very light regulations” targeting cryptocurrencies in Turkey, but the parliament does not establish them.
Turkey has two major regulations related to cryptocurrencies: one was initiated by the Central Bank of the Republic of Turkey in 2021, which prohibits cryptocurrency holders from making payments in cryptocurrencies such as Bitcoin BitcoinUSD as such goods are not legal tender.
“Since this is not a regulation approved by parliament, no one knows what the consequences, sanctions and fines are for violating these rules,” Polat told Cointelegraph. “Let’s say that this regulation has no feet on the ground,” she added.
The second regulation concerns anti-money laundering (AML) measures and operates under the supervision of the Ministry of Finance’s financial intelligence unit, the Financial Crimes Investigation Board, also known as MASAK. 
This regulation requires exchanges to collect certain Know Your Customer (KYC) data from users in order to prevent illicit activities such as money laundering and terrorist financing.
According to Tansel Kaya, CEO of Mindstone Blockchain Labs, there is also cryptocurrency-related guidance from the Capital Markets Board of Turkey (CMB), known as SPK (Sermaye Piyasası Kurulu).
“The SPK has stated that anyone or any institution linked to the authority will not be able to trade cryptocurrencies,” Kaya said, adding that this includes Turkish banks, broker dealers and others. She highlighted that this regulation is “very old” as the CMB published these guidelines in 2018.
Turkey is the fourth largest cryptocurrency market in the world
Turkey is a major global cryptocurrency economy and is one of the countries with the highest cryptocurrency adoption rate in the world.
According to data from Chainanalysis, Turkey is the fourth largest cryptocurrency market in the world in terms of an estimated trading volume of $170 billion, ahead of countries such as Russia, Canada, Vietnam, Thailand and Germany.
In September 2023, Turkey’s national currency, the lira, became the leading cryptocurrency trading pair on Binance, accounting for 75% of all fiat trading volume. The event was attributed to a significant influx of cryptocurrency investors into the Turkish market.
Some studies say that the adoption rate in Turkey has more than doubled in recent years, reaching 40%. This study suggests that two in five Turkish citizens hold cryptocurrencies.
“The number of Turkish investors in cryptocurrencies is estimated to be 20 million, out of 85 million of the total population of our country,” Polat said.
Why Turkey wants to adopt cryptocurrency regulations in 2024?
Turkey’s planned cryptocurrency legislation is poised to help the country exit the Financial Action Task Force (FATF) “grey list” associated with anti-money laundering (AML) measures. The regulator placed Turkey on its “grey list” in October 2021 due to disproportionate regulation of the nonprofit sector.
According to Polat, to get off the FATF’s “grey list”, Turkey will have to resolve 39 actions, including one related to the cryptocurrency industry. The FATF requires countries to comply with its framework to ensure that virtual assets are not used for criminal activities.
Turkey’s cryptocurrency law will cover cryptocurrency exchanges, taxes and more
Turkey’s upcoming cryptocurrency regulation legislation will mainly address the regulation and licensing of cryptocurrency exchanges.
The regulation will define the responsibilities of exchanges, defined as virtual asset service providers (VASPs) in the FATF framework. The law will also focus on standards relating to safe custody, i.e. the storage of crypto assets by VASPs in order to ensure maximum investor protection.
The aspect of investor protection has become a hot issue in Turkey after the collapse of a major local cryptocurrency exchange called Thodex. The Thodex exchange abruptly stopped trading and withdrawals in April 2021. Thodex founder Faruk Fatih Özer was eventually sentenced to 11,196 years in 2023 on charges of fraud estimated at up to $2 billion.
In addition to the VASP regulations, the upcoming Cryptocurrency Law is expected to finally provide a legal basis for cryptocurrency taxes in Turkey.
Related: Turkey ranks first in the world when it comes to the share of stablecoin purchases relative to GDP
According to local reports, the Turkish tax administration plans to impose low-rate transaction taxes on cryptocurrencies, one of which is the Banking and Insurance Transaction Tax (BSMV), the rate of which today is 5%.
The government is also expected to require citizens to declare their cryptocurrency earnings, but reportedly plans to reset the tax withholding rate to zero.
Additionally, the next bill is expected to address the regulation of tokenization of real-world assets.
When is Turkey expected to introduce cryptocurrency legislation?
It is unclear when Turkey is expected to finally release its cryptocurrency legislation, although many publications expect to see some progress early this year.
Some industry observers have linked the timing of the introduction of the cryptocurrency law in Turkey to the upcoming meeting of the US Office of Foreign Assets Control in June.
“At that point they will evaluate the possibility of removing Turkey from the gray list. The law will probably have to be passed and the regulations will have to come into force first,” Kaya told Cointelegraph, adding that the regulation is expected in May.
“My opinion or my hypothesis is that this will happen at the end of this parliamentary season, which is, let’s say, June,” Polat noted, adding:
“But if they can’t do that, then it will mean it will be moved to the fall or maybe the end of the year. So, in my opinion, the gray list issue has been removed from the agenda a bit.”