IS TÜRKİYE THE NEW HAVEN FOR CRYPTO?

A look to the legislative intention

Governments worldwide are striving to understand Web3 developments and crypto assets. Unfortunately, many perceive crypto as a tool for malicious actors. The Turkish government, however, has been cautious, aiming to understand the needs and capabilities of the community before introducing regulation.

Rumors of regulation have been circulating in Türkiye for years, with the community eagerly awaiting official developments. On May 16, 2024, the Proposal Regarding the Amendment of the Capital Markets Law was submitted to the Grand National Assembly of Türkiye. This proposal introduces new control mechanisms for the establishment and operation of crypto asset service providers and the custody of these assets. The proposal may be amended in the commission or the Grand National Assembly or accepted as presented.

Let’s delve deeper into the proposal:

1.     First, the Commission acknowledges crypto assets and recognizes that the evolving financial world necessitates changes in governmental mechanisms. The Turkish Commission appears to understand the decentralized nature of crypto assets and seeks to integrate this aspect into the Turkish financial system without stifling entrepreneurship and innovation.

2.     References to Financial Stability Board notifications indicate that the Turkish Commission is aware of the risks and grey areas in the crypto space that can be exploited by bad actors, potentially harming uninformed citizens. The government aims to act as a regulator and protector, setting boundaries for service providers to safeguard innocent players' assets.

3.     The Commission also acknowledges the benefits of crypto and categorizes crypto assets into three main groups: security crypto assets, electronic money crypto assets, and utility crypto assets (including NFTs). This classification aligns with commonly used systems and also mentions stable and non-stable crypto assets.

4.     The Commission integrates crypto assets into the law by asking, "What is the undertaking?" The answer equates a crypto public offering with a common public offering, both potentially committing unlawful acts. Therefore, the need for regulation empowers the Capital Markets Board of Türkiye to oversee crypto asset issuance and circulation.

5.     Recognizing the technological advancements of crypto assets, the Commission encourages technical projects by advocating for support from TÜBİTAK (Türkiye Scientific and Technical Research Institute).

6.     However, the Commission's goodwill towards the technical side does not extend to anonymity, secrecy, and decentralization. While the Commission aims to protect uninformed masses, it is debatable whether it should try to alter the fundamental nature of crypto assets by forcing providers or maintainers to reveal data.

7.     A closer examination reveals that the proposal requires service providers to register with the Capital Markets Board and pay legal fees equal to 2% of their annual income (1% to the Capital Markets Board and 1% to TÜBİTAK). This is understandable, considering the support and incentives that will be provided to technological projects developed by young Turkish start-ups.

For more information and further questions on the legislative intention and the government’s stance on crypto assets, please feel free to reach out. Don’t forget to follow us on LinkedIn to stay informed of our updates!