It is expected that a "Crypto Asset Law" will be implemented for crypto assets, which has been on the agenda of the Grand National Assembly of Turkey as well as the agenda of the world in recent days. It has been announced that a draft for crypto assets has been created in the Parliament in the past days, and a meeting is planned to be held in a short time where the opinions and suggestions of the on crypto assets sector will be received.

With the medium-term financial plan published for 2021-2023 in October 2020, signals that crypto assets could be taxed in the coming days were given, however there was no regulation in this regard. The first regulatory step regarding crypto assets was defining what a “Crypto Asset” was for the first time by the Central Bank of the Republic of Turkey with the “Regulation on the Non-Use of Crypto Assets in Payments” published in the Official Gazette on April 16, 2021. However, with this regulation a restriction was introduced in the regard that crypto assets could not be used for payments, payment services and issuance of electronic money.

Nonetheless, crypto assets, continued to remain on the agenda and a regulation was needed due to the fact that many issues were left in the open in the regulatory sense and the discussions within the framework of the law continued.

Among the matters expected to be regulated in the draft law on Crypto Assets are;

• Making it mandatory to obtain permission for the establishment and operation of crypto asset trading platforms,
• Taxation on amounts above a certain limit,
• Regulating the necessary conditions for becoming a crypto asset service provider,
• Determining the measures to be applied in the illegal transactions of crypto asset service providers and unauthorized crypto asset service provider activity,
• Determining the penalties to be applied in the cases of unauthorized crypto asset service provider activity,
• Special investigation procedure for embezzlement of crypto assets.

In parallel with these developments, in addition to increasing supervision in crypto asset companies and seeking capital requirements in companies in the sector, it is expected that protective measures such as providing time and collateral to companies in the system for infrastructure work to take place. It is also among the issues discussed that the Financial Crimes Investigation Board (“FCIB”) will be authorized for money transactions that are considered suspicious.

First Penalty for Crypto Asset Platforms in Turkey

On the other hand, Crypto Asset Service Providers were added to the list of the FCIB obligors within the scope of the Regulation on the Amendment of the Regulation on the Prevention of Laundering Proceeds of Crime and the Financing of Terrorism (“Amendment Regulation”) published in the Official Gazette on May 1. In this context, the FCIB has published a guide on crypto service providers on its website. Accordingly, the obligations of crypto-asset service providers were determined as customer recognition, suspicious transaction reporting, information and document submission, continuous reporting, preservation and submission.

A leading player in the crypto money market was fined 8 million Turkish liras, which is the upper limit for violations detected in the liability audit conducted by the FCIB. The said administrative fine is considered the "first penal sanction" in this area.

With the implementation of the law on crypto assets, the prevention of crimes such as money laundering and fraud committed in this field is also among the targets, and it is expected that the law proposal will be submitted to the Presidency of the Assembly after it takes its final form. Finally, the regulation is planned to be implemented within this legislative year.

Authors: Seçil Kısakürek, Melodi Özer