Doing Business in Turkey: Crypto assets

Interest in crypto assets has been steadily growing over the past 10 years. In 2020, Turkey ranked 14th among cryptocurrency investors around the world according to a report from the Information and Communication Technologies Authority. The heightened interest in crypto assets and crypto trading in Turkey has caught the attention of global crypto exchange platforms. In 2021, numerous global crypto asset exchange platforms opened local operations. 

In 2019, the Parliament passed the 11th Development Plan, which outlines, among other things, the implementation of a blockchain-based digital central bank currency and the establishment of the Association of Payment Services and Electronic Money Institutions. In April 2021, the Regulation on the Disuse of Crypto Assets in Payments, Turkey’s first legislation relating to crypto assets, entered into force. 

The Regulation defines crypto assets as “intangible assets virtually created by use of distributed ledger technology or a similar technology and distributed over digital networks but not classified as fiat money, registered money, electronic money, payment instrument, security or other capital market instrument.” The Regulation does not prohibit crypto assets out right, nor does it prohibit the purchase, sale, offering, transfer or custody of crypto assets and the platforms providing such services (i.e. crypto asset exchanges). 

The Regulation does, however, prohibit:

1. the use of crypto assets directly or indirectly in payments;
2. the development of business models by banks, payment institutions and electronic money institutions that directly or indirectly use crypto assets; and 
3. payment institutions and electronic money institutions from acting in intermediary activities for platforms providing for the purchase, sale, custody, transfer or offering of crypto assets.

Additionally, following amendments made to the Anti-Money Laundering Regulation in May 1, 2021, crypto asset service providers and saving finance companies are deemed to be obligors within the scope of the legislation on the prevention of laundering crime proceeds and financing of terrorism. These service providers are now liable for the fulfilment of the obligations stipulated under the Anti-Money Laundering Regulation and other relevant legislation. Obligations include conducting know-your-customer procedures, notifying suspicious transactions, periodic reporting, and retention and submission of information to the Financial Crimes Investigation Board of Turkey.

It was recently announced by the Presidency that a draft bill regarding the detailed regulation of crypto assets and platforms has been submitted to the Parliament for review and development. It is expected that a major piece of legislation on crypto assets will be introduced in Turkey in the very near future.