Turkey Tightens Grip on Crypto With New Bill: What You Need to Know

On May 16, Turkey’s ruling party submitted a draft cryptocurrency bill to parliament, aiming to transform the country’s crypto regulations. This proposed law focuses on licensing and registering crypto service providers to meet international standards and improve Turkey’s standing with the Financial Action Task Force (FATF), a global watchdog for money laundering and terrorist financing.

Here are the nitty-gritty details.

Addressing FATF Gray List Status

In October 2021, Turkey was placed on the FATF gray list due to insufficient anti-money laundering measures in sectors like banking and real estate. Being on the gray list means increased scrutiny and the need for active efforts to fix these issues. The new bill is a critical step towards addressing these shortcomings.

Strengthening Crypto Oversight

The draft law aims to regulate crypto trading platforms and other service providers by requiring them to obtain licenses from Turkey’s Capital Markets Board (CMB). The CMB will have the authority to create additional regulations and set guidelines for crypto asset service providers and transactions. This is especially important given the recent bankruptcies of smaller trading platforms.

Regulation for a Modern Market

According to a Reuters report, the bill is designed to update existing laws and comprehensively govern the crypto market. It covers all aspects of crypto asset service providers, including platform operations, asset storage, and transactions by Turkish residents.

The main goals are consumer protection, platform transparency, and compliance with financial regulations.

Keeping Up With International Standards

The proposed legislation includes FATF-issued travel guidelines, which require crypto companies and financial institutions involved in digital asset sales, known as Virtual Asset Service Providers (VASPs), to obtain and share accurate originator and beneficiary information with counterparty VASPs or other financial institutions before or during transactions. This aims to enhance transparency and traceability in the crypto sector.

Before submitting the bill, Turkish officials met with the FATF team in anticipation of the FATF’s report due in June. The Turkish government hopes that implementing the new regulations will lead to an upgrade from the FATF, demonstrating the country’s commitment to improving its financial regulatory framework.

Could this be a model for other countries to follow? Weigh in.

Also Read: Crypto Regulations In Turkey 2024