The Ministry of Finance and Treasury of Turkey has announced the completion of work on a draft law on the regulation of cryptocurrencies. Parliament will consider the document in October 2021.
Deputy Finance Minister Şakir Ercan Gül said that the authors of the initiative drew on the experience of Europe and the United States. But focused on “a more rigid structure”.
The authorities want to not only increase the transparency of digital currencies transactions, but also protect investors.
Thus, the bill aims to protect retail investors, prevent money laundering and strengthen control over cryptocurrency exchanges. It defines various categories of cryptocurrencies, outlines the rules for their release, distribution and trading. It also specifies the conditions that custodian services must comply with. There are also minimum capital requirements for cryptocurrency firms. But there will be an adaptation period for them so that firms can “adjust” to the new legislation.
The Capital Markets Council of Turkey will oversee the organizations dealing with digital currencies. And the Turkish Banking Regulation and Supervision Authority (BRSA) will audit the cryptocurrency industry participants. In addition, the BRSA will develop mechanisms to protect users and market integrity. The new regulatory framework also provides for the admission to work with classified information provided to virtual asset service providers (VASP). The Ministry of Finance of Turkey reported that both of the above-mentioned departments took part in the development of new regulation of cryptocurrencies.
Prohibition of cryptocurrency payments
This spring, Turkey’s central bank banned the use of cryptocurrencies to make payments. Therefore, from April 30, payment operators cannot provide services to deposit or withdraw cryptocurrencies from trading platforms. Turkish users can only deposit fiat currency on cryptocurrency exchanges via bank transfer.
Local experts believe that a more friendly approach to the regulation of cryptocurrencies, especially their taxation, could make Turkey an attractive jurisdiction for international investors.
The Turkish central bank rules out the possibility of a complete ban on digital currencies in the country. But at the same time, the regulator for the first time expressed concerns that mining has a negative impact on the environment.
The latest tightens are related to the THODEX cryptocurrency exchange and the closure of Vebitcoin.
On April 20, the Turkish Thodex exchange unexpectedly stopped trading. Citing first technical work and then the transfer of the platform to a new partner.
The CEO of the company Farouk Fatih Ozer was put on the wanted list. The court later arrested six people associated with Thodex, including relatives of the head of the platform.
On April 26, due to financial difficulties, the Vebitcoin exchange stopped working.
After that, it became known about Turkey’s plans to create a centralized custodian bank in order to eliminate the risk of insolvency of the counterparty in the field of digital assets.
The head of the country’s central bank, Şahap Kavcıoğlu, also announced the imminent introduction of cryptocurrency regulation. We will remind, in May, the Minister of Finance of Turkey Lütfi Elvan said that local exchanges must notify the Council for Investigation of Financial Crimes on transactions of users exceeding the limit of 10,000 lira (~ $ 1200).