Turkey Set to Enact Crypto Legislation by End of 2024

The Turkish government is going to enact legislation regarding the regulation of cryptocurrencies by the end of the year. In January, Turkish Minister of Treasury and Finance Mehmet Şimşek declared the finalisation of regulations for this sector. However, as of now, the legislation has not been presented to Parliament.

Turkey Set to Enact Cryptocurrency Legislation by End of 2024

In November 2023, Şimşek announced plans to implement FATF regulations to remove Turkey from the “grey list”, which includes countries lacking sufficient measures against financial crimes. Turkey has been on this list since October 2021.

Local crypto expert Ismail Hakki Polat noted the current existence of “very slight regulations” regarding cryptocurrencies in Turkey, but they haven’t been established by Parliament.

The Central Bank of Turkey has implemented two key regulations concerning digital assets: a prohibition on crypto payments and strict compliance to Anti-Money Laundering (AML) rules. AML regulations obligate exchanges to conduct Know Your Customer (KYC) procedures to prevent money laundering and terrorist financing. Earlier it was reported that AML rules will be tightened in the European Union.

Polat emphasised that these regulations were not passed by Parliament, hence the specifics regarding consequences, fines, and sanctions for non-compliance remain unclear.

Tansel Kaya, the head of Mindstone Blockchain Labs, referenced the recommendations of the Turkish Capital Markets Board, which, since 2018, have prohibited transactions with cryptocurrencies among government organisations like banks and broker dealers.

In a recent Chainalysis report, Turkey is the fourth-largest crypto market, trailing behind the US, India, and the UK, and surpassing countries like Vietnam, Russia, Germany, Canada, and Thailand. Remarkably, Turkey has one of the highest levels of crypto adoption globally, with two out of five citizens owning crypto.

Experts anticipate that the regulation of Turkey’s crypto industry will likely impact the operations of crypto exchanges, aiming to safeguard investors, particularly in light of the Thodex exchange collapse. The Turkish Revenue Administration is expected to introduce a 5% tax rate on crypto transactions. Notably, users will not face income tax on operations, yet they will be required to declare their crypto income.

Ismail Hakki Polat noted the need to address 39 points for Turkey to be removed from the FATF “grey list”, with only one point concerned to cryptocurrencies. Tansel Kaya predicts that this process could be finalised in the first half of the year, potentially preceding the June meeting of the U.S. Office of Foreign Assets Control. However, if lawmakers fail to submit the document by the designated date, the decision regarding crypto sector regulation could be delayed until late 2024.

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