The Law Proposal on Amendments to the Capital Markets Law, which includes regulations on the definition and licensing of crypto assets, was accepted and enacted by the General Assembly of the Turkish Grand National Assembly (TBMM). The legal regulation regarding Crypto Assets was published in the Official Gazette dated July 2, 2024. One of the most curious topics about the regulation was taxation. The law does not include any provision for taxing investors. However, platforms providing services in Turkey will pay 1% of all their annual revenues, excluding interest income, to the Capital Markets Board (CMB) and 1% to the budget of TÜBİTAK (The Scientific and Technological Research Council of Turkey) by the end of May each year.
Important Definitions in the Regulation
Wallet: Software, hardware, systems, or applications that allow the transfer of crypto assets and the online or offline storage of these assets or related private and public keys.
Crypto Asset: Intangible assets that can be created and stored electronically using distributed ledger technology or similar technology, distributed over digital networks, and can represent value or rights.
Crypto Asset Service Provider: Platforms, entities providing custody services for crypto assets, and other entities designated to provide services related to crypto assets, including their initial sale or distribution, based on this Law.
Platform: Entities where one or more of the following transactions take place: buying, selling, initial sale or distribution, exchange, transfer of crypto assets, the custody required for these activities, and other specified transactions.
TÜBİTAK: The Scientific and Technological Research Council of Turkey.
Other Important Points of the Regulation
The Capital Markets Board (CMB) will be authorized to issue capital market instruments as crypto assets. The authority to regulate the ecosystem is given to the CMB, while TÜBİTAK’s criteria will be applied for information systems and technological infrastructures. These two institutions will be the primary regulatory bodies for crypto asset service providers.
Financial audits and independent audits of information systems for crypto asset service providers will be carried out by independent audit firms listed by the CMB.
One of the main focuses of the initial regulations was the licensing process for platforms providing services in the country. Accordingly, it will be mandatory for platforms to obtain permission from the CMB to establish and start operations, ensuring the reliability of service providers under state supervision.
Current service providers must apply for an operating license within one month from the effective date of the regulation. If these platforms do not wish to obtain a license, they must submit a declaration within three months that they will liquidate without harming customer rights and interests.
Individuals and legal entities identified as operating as crypto asset service providers without permission will face imprisonment of 3 to 5 years and judicial fines of 5,000 to 10,000 days. Thus, the legal sanctions for non-compliance with the regulation are clarified.
The cash and crypto assets of customers cannot be seized due to the debts of crypto asset service providers. The assets of crypto asset service providers cannot be seized for public receivables, even if they are due to the debts of customers.
The principles and procedures for listing crypto assets will be determined by the CMB. These principles and procedures may include technical criteria related to the technological features of crypto assets, taking into account the views of TÜBİTAK or other necessary institutions and organizations. The listing of a crypto asset by platforms will not imply public approval.
Electronic transaction devices, known as ATMs, which allow customers to convert their crypto assets into cash or other crypto assets, will terminate their activities within three months following the effective date of the law. ATMs that do not terminate their activities will be shut down by the competent authorities.
Although the current regulation does not impose a tax obligation on investments, it aims to increase the reliability of crypto asset service providers by subjecting them to various permits and licenses under state supervision.
