Key Takeaways:
- Regulations are tightening: Turkey is imposing stricter rules on crypto exchanges and custodians.
- The Capital Markets Board (CMB) expands its oversight of crypto platforms.
- Anti-Money Laundering (AML) standards are about to be greatly enhanced.
Turkey is establishing new rules for Crypto Asset Service Providers (CASPs) in a bold move to regulate the cryptocurrency industry. Announced on March 13th by Turkey’s Capital Markets Board (CMB), these rules mark a turning point in Turkey’s regulation of the crypto-assets ecosystem, as crypto exchanges, custodians and wallet service providers are now subjected to closer scrutiny.
CMB Takes the Reins: Licensing, Operations, and Compliance
Under the new regulatory framework, the CMB has been granted complete oversight of domestic crypto platforms. This effort encompasses the oversight of CASP licensing, operational compliance, and adherence to national and international standards across regulatory domains. The CMB’s involvement is significant, as it suggests that the crypto sector may come under formal regulation. “The framework sets standards and requirements for establishing and providing crypto asset services in Turkey, covering establishment capital, history of executives, shareholder rules and others,” an official document published by CMB last week says.
Excerpt from the CASP regulations title page documentation by the CMB. Source: Official Gazette
Financial Requirements and Risk Management
The rules extend beyond oversight, imposing tangible financial obligations. International lawyer Burcak Ünsal explained to Cointelegraph that exchanges need a minimum of $4.1 million, while custodians need a minimum of $13.7 million. These capital requirements aim to guarantee the financial health of CASPs functioning in the nation. Ünsal explained that “fixed assets, receivables, available for sale financial assets are excluded from the minimum capital requirement.“
In addition, CASPs must also invest heavily in compliance infrastructure and build risk management teams to detect and address risk across multiple fronts. Traders will also be required to implement a price monitoring system to identify and notify authorities of suspicious trading activities. This is to prevent market manipulation and avoid defrauding investors.
Enhancing Anti-Money Laundering Frameworks and Data Collection
Turkey believes that robust crypto AML measures will positively impact its economy. This will require CASPs to keep records for a broad range of transaction data, including information on canceled and unexecuted transactions, according to the docs. This is a substantial increase in the data that CASPs must manage and report on. In 2022, Turkish regulators proposed Anti-Money Laundering (AML) regulations requiring users to share identifying information for any transaction over 15,000 Turkish Liras (approximately $409).
Anti-Money Laundering Compliance in the Republic of Turkey
Consider this scenario: a user attempts to transfer the equivalent of $500 in Bitcoin. The exchange is now required to collect and record identifying information from all transactions for the user, adding an extra layer of complexity to transactions, balanced by improved security and traceability.
Derivative Transactions and Initial Coin Offerings
The CMB’s regulatory framework explicitly prohibits derivative transactions involving cryptocurrencies. The ban on crypto derivatives will significantly impact trading strategies and investment options for Turkish crypto users. However, exchanges can issue ICOs as long as smart contracts are well-audited and listing criteria are high. The issuance of security tokens is not explicitly prohibited, and the regulations do not define what constitutes a security token. Purchases of goods and services with crypto are still banned in Turkiye on the basis of a Central Bank regulation.
A Harmonization with International Standards: MiCA Meets SEC
Turkey’s new crypto regulations are being shaped to align with global standards, according to official documentation. The government is monitoring regulatory pathways laid out by Europe’s Markets in Crypto-Assets Regulation (MiCA) and the U.S. Securities and Exchange Commission (SEC). It signals that Turkey aims to be a responsible player in the global crypto ecosystem, adhering to best practices to establish a secure and compliant environment.
More News: MiCA Regulation: A New Dawn or a Dark Cloud for Europe’s Crypto Market?
Implementation and Continued Evolution of the “Travel Rule”
As part of broader updates to crypto regulations, Turkey is increasing accountability through the Travel Rule. In its wider updates to its Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) framework, which were published in December 2024 and follow the standards set out by the Financial Action Task Force (FATF), the Travel Rule will see expanded information-sharing requirements during crypto transfers. This security enhancement initiative is spearheaded by MASAK (the Financial Crimes Investigation Board) under the Ministry of Treasury and Finance, with the rules taking effect starting February 25, 2025.
These regulations can be a stumbling block for crypto businesses, but they also bring opportunities. Turkey is trying to reach its goal of attracting legitimate crypto businesses and fostering innovation in a controlled ecosystem through a well-defined set of regulations. The long-term effects will depend on how well these regulations are enforced, and how the crypto community responds. These regulations serve as a warning to market participants.
