Turkish President Tayyip Erdogan’s ruling party has introduced a draft law to parliament, mandating licensing and registration for crypto asset service providers. This move aims to upgrade Turkey’s standing with the Financial Action Task Force (FATF), a global financial watchdog.
New Turkey Crypto Bill Components
The proposed crypto regulation, presented by the AK Party, stipulate that cryptocurrency trading platforms and related companies must obtain licenses from Turkey’s Capital Markets Board. “The law regulates crypto asset service providers, the activities of crypto asset platforms, storage of crypto assets, and crypto asset buying, selling and transfer transactions that people residing in Turkey can make,” the draft stated.
In October 2021, the FATF downgraded Turkey to its grey list due to insufficient supervision of sectors vulnerable to money laundering and the financing of groups on the United Nations’ sanctions list. Countries on this list face increased monitoring and are required to work closely with the FATF to address deficiencies.
The draft law outlines comprehensive requirements for platform management, the services platforms can offer, and financial and operational standards. It emphasizes the need for tighter regulation of the crypto sector to mitigate risks, particularly in light of recent bankruptcies of smaller trading platforms that left many without access to their funds.
Turkey capital Ankara has been developing legislation on crypto assets for over two years, driven by a desire to regulate the burgeoning sector and protect investors. The new regulations are seen as crucial to restoring trust in the market and preventing future financial losses for consumers.
FATF Meets Turkish Officials
According to the draft, the Capital Markets Board will be empowered to create secondary regulations and establish procedural guidelines for crypto asset service providers and transactions. This includes oversight of compliance with the new standards and enforcement actions against non-compliant entities.
Earlier this month, sources informed Reuters that an FATF team met with Turkish officials in preparation for a forthcoming report on Turkey, expected in June. The government anticipates a positive evaluation and hopes for an upgrade from the FATF following the implementation of these new regulations.
In addition to addressing FATF concerns, the draft law aims to enhance Turkey’s financial infrastructure and attract more investment into the crypto sector by creating a more secure and regulated environment. By setting clear rules and standards, the government seeks to provide a stable foundation for the growth of crypto trading and services in the country.
The introduction of this bill marks a significant step in Turkey’s efforts to exit the FATF grey list and reestablish itself as a compliant and trustworthy member of the global financial community. With these measures, Turkey aims to demonstrate its commitment to combating money laundering and terrorist financing. Hence, it seeks to improve its international financial reputation.
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