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Insights into Turkey’s Anticipated Crypto Legislation: Key Points to Understand

May 6, 2024 at 05:42

Turkey, a significant player in the global cryptocurrency landscape, is gearing up to introduce crypto-related regulations this year, following announcements from Turkish Treasury and Finance Minister Mehmet Simsek regarding the near-completion of local crypto legislation. Despite expectations for an early 2024 rollout, the parliamentary process is yet to commence.

  1. Existing Regulations: While formal legislation is pending, Turkey already operates under some “light” regulations affecting the crypto market. Notably, the Central Bank’s 2021 directive prohibits crypto as legal tender for payments. Additionally, Anti-Money Laundering (AML) measures overseen by the Financial Crimes Investigation Board (MASAK) mandate exchanges to implement Know Your Customer (KYC) protocols.
  2. Turkey’s Crypto Market Size: Turkey stands as the fourth-largest cryptocurrency trading market globally, boasting a trading volume of $170 billion. The country’s rapid adoption of crypto, with an estimated 40% of citizens reportedly involved, underscores its significance in the crypto space.
  3. Regulatory Impetus: Turkey’s move towards crypto regulation aligns with efforts to address concerns raised by the Financial Action Task Force (FATF), aiming to secure removal from the FATF’s “gray list.” Compliance with FATF standards is crucial to combatting criminal activities involving virtual assets.
  4. Proposed Regulatory Scope: Anticipated legislation will primarily target crypto exchanges, outlining their obligations and operational standards. Focus areas include investor protection, prompted by incidents like the Thodex exchange collapse in 2021. The bill is also expected to address tax implications of crypto transactions, including low-rate taxes and declaration requirements.
  5. Timeline Uncertainty: Despite anticipation for crypto legislation, the exact timeline remains uncertain. Speculation links the potential release to the June meeting of the U.S. Office of Foreign Assets Control, correlating with efforts to exit the FATF’s “gray list.” While some predict a May release, others suggest a delay until later in the year, emphasizing the shifting focus from immediate regulatory compliance to broader legislative priorities.

As Turkey navigates the complexities of crypto regulation, industry stakeholders await further clarity on the legislative process and its implications for the evolving crypto landscape.

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