In a move to regulate the crypto market in its region, Turkey is gearing up to implement new rules centered on “licensing” and “taxation.” This development comes as the country sheds its status on the Financial Action Task Force’s (FATF) “grey list,” which flags potential risks in money laundering and financial crimes.
The upcoming regulations are expected to address concerns raised by the Paris-based financial watchdog, which had placed Turkey on this watchlist in 2021.
A Balancing Act: Security, Investment, And Turkey’s Crypto Boom
Bora Erdamar, Director at BlockchainIST Center, highlighted that establishing licensing standards will be prioritized in the new framework. This measure aims to “prevent the abuse of the system,” according to Erdamar.
The Director at BlockchainIST Center, further added that the anticipated regulations might encompass capital adequacy requirements, digital security measures, enhanced custody services, and mandatory proof of reserves.
Introducing these regulations is a crucial step in Turkey’s efforts to comply with international standards and improve its financial reputation.
Meanwhile, according to Reuters, Turkey’s soaring interest in crypto has been largely fueled by persistent double-digit inflation, which reached 85% last year, and a significant devaluation of the lira against the dollar.
These economic challenges have driven Turkish investors towards digital currencies, with a survey by Binance Research revealing that more of them entered the crypto market in the past two years. As Turkey faces these economic headwinds, the proposed regulations are expected to safeguard investors and ensure stability in the country’s crypto sector.
Towards Regulatory Clarity: Turkey’s Push For Crypto Legislation And Taxation
Finance Minister Mehmet Simsek has indicated that the government is working swiftly to introduce legislation covering crypto-assets. This move addresses the FATF’s recommendations and enables Turkey to exit its grey-list status.
Mucahit Donmez, CEO of Binance Turkey, expressed optimism about the regulations disclosing that such standards, he believes, will contribute positively to the sector’s growth. Donmez noted:
We think that ensuring the security of users’ assets and setting up certain criteria in terms of minimum capital requirements, listings and custody, and requirements for platforms to obtain operation licenses will contribute positively to the sector.
The Turkish authorities have also revealed their intention to implement regulatory measures for cryptoasset service providers and establish taxation guidelines for digital virtual assets in 2024. According to Erdamar, a “reasonable taxation policy,” which does not deter investors, will be pivotal in building trust in the sector.
Onur Altan Tan, a board member at Futurance Finance Tech & Fexobit, anticipates that the new regulations will clarify platform licensing criteria and introduce user taxation.
Featured image from Unsplash, Chart from TradingView