The Turkish Finance Minister confirmed that Turkey has reached the final stage of its technical studies on digital asset regulations and will publish its draft rules soon.
Treasury and Finance Minister Mehmet Simsek said in an interview with state-owned Anadolu Agency that the draft regulations will cover digital asset exchanges and aim to protect investors and introduce operating standards.
“Our primary goal in regulating cryptocurrency assets is to make this area safer and eliminate potential risks. Our approach is not restrictive; it is based on removing uncertainties and controlling potential risks,” Simsek told the outlet.
Turkey is one of the world’s largest digital asset hubs, and as the lira has fallen in value in the past few years, this reliance has risen. The country ranked 12th in digital asset adoption last year and second in Europe, according to Chainalysis. It ranked fourth in the world and second in Europe in terms of transaction volume in 2023, with a value of $170 billion.
However, the country has not yet implemented regulations for this industry. This makes the draft rules crucial, as the minister noted that they will limit misuse of the platform. Turkey was home to Thodex, an exchange that lost $2.6 billion in user funds. Founder Faruk Fatih Ozer was sentenced to 11,000 years in prison in 2023.
“Therefore, we are taking steps to reduce the risks faced by those who engage in transactions with crypto-assets in our country, following international practices,” the minister said.
Exit the FATF gray list
Simsek added that the draft rules are also intended to help the country as it seeks to exit the Financial Action Task Force (FATF) gray list. The FATF added Turkey to the list in November 2021, warning the country to address “complex money laundering issues and demonstrate that it is pursuing prosecutions for terrorist financing.”
In 2023, it emerged that Turkey had addressed all but one of the 40 FATF recommendations, namely digital assets. The draft rules aim to address this, allowing the country to fall off the list, affecting the country’s ability to attract investments and loans from global institutions.
Under the new rules, exchanges will have to obtain a license from the Capital Markets Board and will be required to meet operational requirements similar to financial institutions.
“These will include conditions related to founders and directors, regulatory obligations, capital requirements, and IT infrastructure obligations,” Şimşek said.
The minister revealed that the draft new rules define “crypto” as “intangible assets created and stored electronically using distributed ledger technology or similar technology, distributed across digital networks, and capable of representing value or rights.”
In drafting the rules, Turkey studied global regulatory trends, but as the minister revealed, no country has definitively taken the lead in monitoring digital assets. Europe has made great strides under the MiCA framework; Japan’s Financial Services Authority has been active in monitoring digital assets; South Korea welcomed the first of two-part regulatory framework in July; German BaFin has guidelines covering new use cases such as DeFi. However, none of them have issued comprehensive regulations.
“At this point, when we look at foreign practices regarding crypto-assets, we see that countries are progressing by adopting appropriate approaches to their financial and legal systems. In this sense it becomes clear that steps must be taken in our country regarding such regulation,” the Minister noted.
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