Turkey proposes aligning crypto legislation with international standards

The draft law aims to govern crypto asset service providers, crypto asset platform operations, crypto asset storage, and crypto asset buying, selling and transfer transactions.

The Turkish ruling party submitted a draft crypto bill to the parliament on May 16. The bill focuses on licensing and registration for crypto service providers and aligns with international standards.

According to a Reuters report, the draft bill aims to update existing laws to comprehensively govern the cryptocurrency market. The bill’s key focus areas include consumer protection, platform transparency and compliance with financial regulations.

The proposed legislation intends to regulate cryptocurrency trading platforms and other service providers in the sector, requiring them to obtain licenses from Turkey’s Capital Markets Board (CMB).

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The draft law aims to govern crypto asset service providers, crypto asset platform operations, crypto asset storage, and crypto asset buying, selling and transfer transactions by Turkish residents. The legislation also addresses the classification of cryptocurrencies and projects, ensuring compliance with existing financial regulations. Some of the key takeaways from the bill are:

• Crypto service providers must be licensed and regulated by the Capital Markets Board.
• Enhanced CMB oversight to protect consumer assets and ensure effective dispute resolution.
• Mandatory revenue collection from crypto service providers by CMB and the Scientific and Technological Research Council of Turkey.
• Ban on foreign crypto brokers to foster a locally regulated ecosystem.
• This move seeks to align Turkey with international standards and address Financial Action Task Force (FATF) concerns, enhancing the security and reliability of the national crypto market.

The draft law proposes to include the FATF-issued travel guidelines. The FATF Travel Rule requires cryptocurrency companies and financial institutions involved in digital asset sales — collectively known as virtual asset service providers (VASPs) — to obtain and share “accurate originator information and beneficiary information” with counterparty VASPs or other financial institutions before or during transactions.

Turkey was demoted to the “gray list” by the FATF in October 2021 due to its failure to implement Anti-Money Laundering measures in its banking, real estate and other industries. The FATF requires countries on the gray list to actively cooperate in rectifying any shortcomings and subject them to heightened scrutiny.