{"id":4386,"date":"2024-06-29T15:48:15","date_gmt":"2024-06-29T13:48:15","guid":{"rendered":"https:\/\/gunayerdogan.com.tr\/en\/?p=4386"},"modified":"2024-08-13T15:49:56","modified_gmt":"2024-08-13T13:49:56","slug":"turkiye-enacts-cyrpto-regulation-and-seeks-fatf-gray-list-removal","status":"publish","type":"post","link":"https:\/\/gunayerdogan.com.tr\/en\/turkiye-enacts-cyrpto-regulation-and-seeks-fatf-gray-list-removal\/","title":{"rendered":"Turkiye Enacts Cyrpto Regulation And Seeks FATF Gray List Removal"},"content":{"rendered":"<p>Cryptocurrencies have revolutionized the financial landscape globally, and Turkiye is no exception. The adoption and regulation of these digital assets have become critical in shaping Turkiye\u2019s economic and legal framework.<\/p>\n<h3>The Evolution of Cryptocurrency in Turkiye<\/h3>\n<p>Cryptocurrencies have revolutionized the financial landscape globally, and Turkiye is no exception. The adoption and regulation of these digital assets have become critical in shaping Turkiye\u2019s economic and legal framework. This article provides an overview of the recent legislative changes in Turkiye concerning cryptocurrency, focusing on the newly enacted regulations and their implications.<\/p>\n<h3>Legislative Changes in the Capital Markets Law<\/h3>\n<p>On June 26, 2024, the Turkish Grand National Assembly (TBMM) passed the long-awaited bill regulating the cryptocurrency market. This significant legislative change is part of a broader reform of the Capital Markets Law, comprising 19 articles dedicated to the regulation of crypto assets.<\/p>\n<h3>The Context of FATF and Turkiye\u2019s Grey List Status<\/h3>\n<p>The same period also marked the beginning of the Financial Action Task Force (FATF) meeting in Singapore, attended by the Turkiye delegation, including Turkish Finance Minister Mehmet Simsek. Turkiye, a member of the FATF, was placed on the grey list in 2021 due to deficiencies in preventing money laundering and terrorist financing. Despite efforts to address these issues in 2022 and 2023, the absence of comprehensive cryptocurrency regulations remained a sticking point.<\/p>\n<h3>FATF Recommendations and Compliance<\/h3>\n<p>FATF\u2019s Recommendation 15, \u201cNew Technologies,\u201d necessitates that countries regulate, license, or register Virtual Asset Service Providers (VASPs) to manage and mitigate risks associated with virtual assets. Turkiye\u2019s initial compliance in 2019 was deemed largely compliant, but by 2021, this rating had fallen due to stricter FATF standards driven by the increasing prevalence of cryptocurrencies. The new legislation aims to fulfill these enhanced requirements by establishing a robust regulatory framework.<\/p>\n<h3>Detailed Provisions of the New Cryptocurrency Regulation<\/h3>\n<p>The newly enacted law introduces several crucial definitions and regulatory measures for the cryptocurrency sector:<\/p>\n<ol>\n<li><strong>Licensing and Registration of VASPs:<\/strong><\/li>\n<li>\n<ul>\n<li><strong>Mandatory Licensing\/Registration:<\/strong>\u00a0VASPs, including platforms, custodians, and other entities involved in the initial sale or distribution of crypto assets, must be licensed or registered to operate legally.<\/li>\n<li><strong>Corporate Transparency and Reputation:<\/strong>\u00a0Legal measures are established to prevent criminals or their associates from having significant control or management roles in VASPs. The regulations mandate that significant shareholders and executives of VASPs must have a clear legal and financial history, free of criminal records, bankruptcies, or any financial misconduct.<\/li>\n<li><strong>AML\/CFT Compliance:<\/strong>\u00a0VASPs are required to adhere to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) regulations. This includes:<\/li>\n<li>\n<ul>\n<li>Conducting Customer Due Diligence (CDD) for transactions exceeding USD\/EUR 1,000, irrespective of whether it involves a continuous business relationship.<\/li>\n<li>Maintaining accurate and complete records of sender and receiver information for all virtual asset transfers, ensuring that these details are securely and promptly shared with the receiving VASP and relevant authorities upon request.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Operational Requirements for VASPs:<\/strong><\/li>\n<li>\n<ul>\n<li><strong>Security and Internal Controls:<\/strong>\u00a0VASPs must implement robust security measures and internal controls to manage and protect user data and assets. This includes establishing secure storage solutions for private keys and other sensitive information.<\/li>\n<li><strong>Platform and Custody Services:<\/strong>\u00a0The law defines a \u201cplatform\u201d as any entity facilitating the buying, selling, initial sale, distribution, exchange, or transfer of crypto assets. Platforms must ensure the security and integrity of transactions and provide custody services for users who do not wish to manage their own private keys.<\/li>\n<li><strong>Record-Keeping and Transparency:<\/strong>\u00a0VASPs are mandated to maintain transparent and accessible records of all transactions and user activities. These records must be readily available for auditing by regulatory authorities.<\/li>\n<li><strong>Technical Standards and Compliance:<\/strong>\u00a0VASPs\u2019 technological infrastructure must comply with standards set by T\u00dcB\u0130TAK (The Scientific and Technological Research Council of Turkiye), ensuring that systems are secure, reliable, and capable of supporting large-scale operations.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Penalties and Enforcement:<\/strong><\/li>\n<li>\n<ul>\n<li><strong>Criminal Penalties:<\/strong>\u00a0Individuals and entities operating without the necessary licenses or registrations face severe penalties, including imprisonment for 3 to 5 years and fines ranging from 5,000 to 10,000 days.<\/li>\n<li><strong>Administrative Actions:<\/strong>\u00a0The Capital Markets Board (SPK) has the authority to suspend or revoke licenses, impose fines, and take other necessary actions against VASPs failing to comply with regulatory requirements.<\/li>\n<li><strong>Misappropriation and Fraud:<\/strong>\u00a0VASP executives and employees found guilty of embezzlement or fraud involving user funds or assets face imprisonment for 8 to 14 years and substantial fines.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Revenue Allocation:<\/strong><\/li>\n<li>\n<ul>\n<li><strong>Platform Contributions:<\/strong>\u00a0Platforms are required to contribute a percentage of their annual revenues (excluding interest income) to the SPK and T\u00dcB\u0130TAK. Specifically, 1% of revenues will be allocated to the SPK and another 1% to T\u00dcB\u0130TAK to support the development of blockchain and related technologies.<\/li>\n<\/ul>\n<\/li>\n<li><strong>User Protection and Market Integrity:<\/strong><\/li>\n<li>\n<ul>\n<li><strong>Client Asset Segregation:<\/strong>\u00a0User assets must be segregated from the VASP\u2019s own assets, ensuring that user funds are protected from the VASP\u2019s financial obligations. These assets cannot be seized or encumbered, even in the event of the VASP\u2019s insolvency.<\/li>\n<li><strong>Dispute Resolution and Transparency:<\/strong>\u00a0VASPs must establish effective mechanisms to address user complaints and disputes. Contracts between VASPs and users must be transparent, fair, and compliant with regulatory standards.<\/li>\n<li><strong>Fair Market Practices:<\/strong>\u00a0Platforms must ensure that prices are formed freely and fairly, preventing market manipulation and ensuring transparent trading practices.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Technological and Regulatory Oversight:<\/strong><\/li>\n<li>\n<ul>\n<li><strong>T\u00dcB\u0130TAK\u2019s Role:<\/strong>\u00a0T\u00dcB\u0130TAK will provide technical guidance and establish criteria for VASPs\u2019 technological infrastructure. This ensures that VASPs use state-of-the-art technology to safeguard user assets and data.<\/li>\n<li><strong>Regulatory Coordination:<\/strong>\u00a0The SPK will coordinate with the Banking Regulation and Supervision Agency (BDDK) for any regulatory measures affecting banks involved in crypto asset services. This collaboration ensures a cohesive regulatory environment for financial and technological services.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<h3>Conclusion<\/h3>\n<p>The regulation of cryptocurrency in Turkiye marks a significant milestone in the country\u2019s financial and legal evolution. The comprehensive legal framework not only addresses FATF\u2019s requirements but also lays the foundation for a secure and transparent crypto asset ecosystem, ultimately benefiting investors, service providers and the broader economy.<\/p>\n<p><em>The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.<\/em><\/p>\n<p><em>First published by Mondaq on 28 June 2024.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cryptocurrencies have revolutionized the financial landscape globally, and Turkiye is no exception. The adoption and regulation of these digital assets have become critical in shaping Turkiye\u2019s economic and legal framework. The Evolution of Cryptocurrency in Turkiye Cryptocurrencies have revolutionized the financial landscape globally, and Turkiye is no exception. The adoption and regulation of these digital [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4387,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[60,9],"tags":[223,224,225,226,227,228,229,230,231,232,233,151,234,128,235],"ppma_author":[96,98,97],"class_list":["post-4386","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bilisim-ve-teknoloji-hukuku","category-publications","tag-aml","tag-capitalmarket","tag-cft","tag-compliance","tag-control","tag-crypto","tag-cryptocurrency","tag-fatf","tag-financial","tag-greylist","tag-licensing","tag-registration","tag-security","tag-technology","tag-transparent"],"authors":[{"term_id":96,"user_id":1,"is_guest":0,"slug":"admin","display_name":"G\u00fcnay Erdo\u011fan Attorneys-at-Law","avatar_url":{"url":"https:\/\/gunayerdogan.com.tr\/en\/wp-content\/uploads\/2023\/12\/Gunay-Erdogan-logo_300px.webp","url2x":"https:\/\/gunayerdogan.com.tr\/en\/wp-content\/uploads\/2023\/12\/Gunay-Erdogan-logo_300px.webp"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":98,"user_id":3,"is_guest":0,"slug":"okkaoglu","display_name":"\u00c7i\u011fdem G. Okkao\u011flu","avatar_url":{"url":"https:\/\/gunayerdogan.com.tr\/en\/wp-content\/uploads\/2023\/09\/Cigdem-Gizem-Okkaoglu.jpg","url2x":"https:\/\/gunayerdogan.com.tr\/en\/wp-content\/uploads\/2023\/09\/Cigdem-Gizem-Okkaoglu.jpg"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":97,"user_id":2,"is_guest":0,"slug":"yselimgunay","display_name":"Yavuz Selim G\u00fcnay","avatar_url":{"url":"https:\/\/gunayerdogan.com.tr\/en\/wp-content\/uploads\/2023\/09\/YSG.jpg","url2x":"https:\/\/gunayerdogan.com.tr\/en\/wp-content\/uploads\/2023\/09\/YSG.jpg"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/posts\/4386","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/comments?post=4386"}],"version-history":[{"count":1,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/posts\/4386\/revisions"}],"predecessor-version":[{"id":4388,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/posts\/4386\/revisions\/4388"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/media\/4387"}],"wp:attachment":[{"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/media?parent=4386"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/categories?post=4386"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/tags?post=4386"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/gunayerdogan.com.tr\/en\/wp-json\/wp\/v2\/ppma_author?post=4386"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}