July 2, 2024 at 14:52 GMTModified date: July 2, 2024 at 14:52 GMT
July 2, 2024 at 14:52 GMT

Turkey legitimises cryptocurrencies under new regulation

By defining cryptocurrencies under the Capital Markets Law, the government aims to bring clarity and legitimacy to digital financial instruments.

Turkey legitimises cryptocurrencies under new regulation

In a landmark decision, Turkey has officially granted legal status to cryptocurrencies, reclassifying them as “intangible fixed assets” under a revised Capital Markets Law.

The move marks a pivotal shift in the country’s approach to digital assets. It comes after the submission of the Draft Law on Regulations Regarding Crypto Assets to the Presidency of the Grand National Assembly of Turkey in May 2024.

The reclassification provides a solid legal foundation for the operation and oversight of cryptocurrency markets within Turkey. 

By defining cryptocurrencies under the Capital Markets Law, the government aims to bring clarity and legitimacy to digital financial instruments. Parallely, it addresses concerns about regulatory oversight and investor protection.

The legislative update requires entities operating in the cryptocurrency sector to obtain licences from the Capital Markets Board (SPK). 

The licensing process includes stringent criteria set by Turkey’s financial authorities, ensuring that cryptocurrency service providers comply with rigorous regulatory standards.

Enhanced security and compliance measures

Beyond legal classification, Turkey’s new legislation introduces comprehensive security measures and compliance requirements. 

Cryptocurrency service providers are now mandated to maintain detailed transaction records and adhere to strict guidelines to prevent fraudulent activities. 

The regulation also imposes severe penalties, including substantial fines and imprisonment, on individuals engaged in unauthorised cryptocurrency transactions. 

These measures underscore Turkey’s commitment to safeguarding investors and maintaining the integrity of its financial markets.

Moreover, the regulation mandates that platforms facilitating digital asset transactions develop robust listing procedures under the supervision of the SPK. 

These procedures govern the selection, initial distribution, and termination of trading for digital assets, ensuring consistency and reliability across cryptocurrency exchanges operating in Turkey.

A proactive stance towards blockchain 

Turkey’s decision to regulate cryptocurrencies comes amidst global discussions on the role of blockchain technology in modern finance. 

The government recognises blockchain’s potential to enhance efficiency and transparency across various sectors, including finance. 

By adopting a proactive regulatory approach, Turkey aims to harness these benefits while mitigating risks associated with digital asset transactions.

The Draft Law on Regulations Regarding Crypto Assets, submitted in May, also acknowledged the rapid growth of cryptocurrency adoption in Turkey. 

Approximately 10 million users have engaged in cryptocurrency trading within the country, highlighting the necessity for regulatory oversight to protect consumers and maintain market stability. 

While Turkey’s regulatory reforms provide a structured framework for cryptocurrency transactions, challenges remain in balancing innovation with regulatory oversight. 

The rapid evolution of blockchain technology necessitates adaptive regulatory measures to address emerging risks and opportunities effectively.

The law also addresses potential challenges associated with foreign transactions involving Turkish residents. 

Platforms based outside Turkey engaging in prohibited activities for Turkish residents may face regulatory sanctions, highlighting Turkey’s commitment to enforcing its cryptocurrency regulations across borders.

By reclassifying cryptocurrencies as “intangible fixed assets” and imposing robust regulatory standards, Turkey aims to foster a secure and investor-friendly environment for cryptocurrency trading. 

This proactive approach not only enhances market transparency and consumer protection but also positions Turkey at the forefront of blockchain innovation in the global financial landscape.

As the cryptocurrency market continues to evolve, Turkey’s regulatory framework will play a crucial role in shaping the future of digital finance within the country.