n a recent development, Turkey's Minister of Treasury and Finance, Mehmet Simsek, has announced that Turkey is on the verge of completing a comprehensive legal framework for crypto assets. This move is seen as an effort to ensure compliance with the Financial Action Task Force (FATF) standards. In an interview, Simsek shed light on the imminent cryptocurrency law and emphasized the broad definition of crypto assets.
The Importance of Regulation and Compliance
According to Simsek, there has been significant interest in crypto asset buying and selling platforms, which brings both opportunities and risks. It is crucial to take steps to mitigate the risks associated with abuse on some platforms and excessive price movements. Simsek mentioned that these steps align with international practices and are part of the efforts to get Turkey out of the gray list of the FATF.
Different countries across the globe adopt varying regulatory practices when it comes to crypto assets. Simsek emphasized the need for Turkey to take regulatory steps that align with its financial and legal systems. Staying informed about global developments is of utmost importance in order to create an effective regulatory framework.
Defining Crypto Assets
As part of the draft regulations, inclusive definitions for crypto assets, wallets, crypto asset service providers, crypto asset custody services, and crypto asset buying and selling platforms will be included. Simsek provided an example of the definition, stating that crypto assets are broadly defined as "intangible assets that can be created and stored electronically using distributed ledger technology or a similar technology, distributed over digital networks, and capable of expressing value or rights."
Under the proposed regulations, crypto asset trading platforms will be licensed by the Capital Market Board of Turkey (CMB). Similar to financial institutions, these platforms will have to adhere to minimum operating conditions. These conditions will cover aspects such as founders and managers, organizational obligations, capital requirements, and IT infrastructure obligations.
Regulating Capital Market Instruments
The CMB will have the authority to regulate the issuance of capital market instruments as crypto assets. The draft also includes provisions for crowdfunding methods to sell blockchain technology infrastructure-related crypto assets. While taxes are not the focus of the current regulation, Simsek mentioned that the tax issue will be studied separately.
The issue of custody for investors is also addressed in the draft regulations. The CMB will regulate the principles and determine the institutions authorized to hold custody. Additionally, the legal framework for measures and sanctions will be established to ensure the protection of investors' assets against the risk of abuse.
The Turkish Presidential Annual Program for 2024 aims to complete cryptocurrency regulations in the country by the end of 2024. These regulations will establish clear definitions for crypto assets and potentially pave the way for their taxation in the future. The program also aims to provide legal definitions for crypto asset providers, specifically mentioning cryptocurrency exchanges.