Turkey has taken a significant step forward in the regulation of crypto assets with the passing of the Bill on the Amendment of the Capital Markets Law by the Turkish Grand National Assembly. This new crypto legislation introduces a comprehensive framework for the operation and regulation of crypto assets and service providers in Turkey.
Key Provisions of the New Crypto Legislation
Definition of Crypto Asset Terms
The new law clearly defines several key terms related to crypto assets. These include “wallet,” “crypto asset,” “crypto asset service provider,” “crypto asset custody service,” “platform,” and “TUBITAK.” This clarity is aimed at ensuring a standardized understanding and approach to the regulation of crypto assets.
Authorisation and Internal Control Requirements
Under the new crypto legislation, crypto asset service providers must obtain authorisation from the Capital Markets Board (CMB) before they can begin operations. Additionally, these service providers are required to establish internal control units and systems to manage their operations securely. Compliance with criteria determined by TUBITAK (Scientific and Technological Research Council of Turkey) is also mandated as a condition for operation.
Regulatory Framework for Crypto Service Providers
Management and Operational Standards
The law outlines specific conditions that must be met by the partners and managers of crypto asset service providers. It also regulates various transactions including trading, initial sales, distribution, clearing, transfer, and custody services. These activities must adhere to the procedures and principles established by the CMB.
Customer Asset Protection
The legislation provides robust protections for customers' crypto assets. It stipulates that these assets cannot be seized, pledged, included in a bankruptcy estate, or subjected to precautionary measures due to the debts of crypto asset service providers. Customers are allowed to store their assets in their own wallets and can conduct transactions on crypto asset trading platforms if they wish.
Secondary Regulations and Advertising Standards
Investment Advisory and Portfolio Management
The new law assigns the CMB the authority to determine the principles and guidelines for investment advisory and portfolio management related to crypto assets. This secondary regulation will ensure that these activities are conducted within a structured and secure framework.
Advertising Regulations
The CMB will also establish principles regarding the advertisements and announcements made by crypto asset service providers. This is to ensure that marketing practices are transparent and do not mislead consumers.
Measures Against Unauthorized Activities
Regulation of Foreign Platforms
The law addresses the activities of foreign crypto asset platforms that offer services to residents in Turkey. Any unauthorized activity by these platforms will be considered illegal. This includes setting up a workplace in Turkey, creating Turkish-language websites, and engaging in promotional activities targeting Turkish residents.
Market Distortion Prevention
To prevent market manipulation, the law includes provisions for applying measures to actions that distort the operation of the stock exchange and other organized markets. This includes activities carried out through the internet and social media.
Penalties for Unauthorized Activities
The law imposes strict penalties for unauthorized crypto asset service provider activities. Unauthorized activities can result in imprisonment for three to five years. Additionally, embezzlement provisions have been introduced for the chairman, board members, and other officials of crypto asset service providers to prevent irregular transactions involving customer assets.
Transition Period for Existing Service Providers
Crypto asset service providers currently operating in Turkey are required to apply to the CMB for authorization within one month. Those that do not apply must take a decision to liquidate within three months. The law also prohibits the operation of cryptocurrency ATMs in Turkey.
Crypto Lawyer in Turkey: Your Crypto Law Experts
Navigating Turkey’s new crypto legislation requires expertise. At Kurucuk & Associates Law Firm in Istanbul, our dedicated team of legal professionals is ready to guide you through compliance and ensure your crypto operations meet regulatory standards. Contact us today for tailored legal advice and proactive compliance strategies.