Turkey Introduces Crypto Regulations by 2024
Turkey has emerged as a global leader in the adoption of cryptocurrencies, with over 5 million crypto holders and a remarkable 52% ownership rate among Turkish adults aged 18-60. In May 2023, the country experienced an unprecedented surge in crypto enthusiasts. Despite the lack of a legal safety net for investors, Turkey’s fintech sector, particularly cryptocurrency, has seen significant growth. This growth has resulted in the imminent introduction of groundbreaking legislation to regulate the crypto domain.
In this report by Coinpedia, we will discuss the latest developments in the Turkish framework related to cryptocurrency. Let’s dive in!
Crypto Adoption in Turkey
Turkey has shown a strong rate of crypto adoption, with two out of every five citizens holding crypto assets. Approximately 40% of Turkish people have reported investing in crypto, making it one of Turkey’s most popular asset classes. Research by Binance has revealed that Turkey’s rate of crypto adoption has increased by 24% over the past three years.
This percentage growth has propelled Turkey to the 12th spot on the Chainalysis global crypto adoption index for 2023, surpassing major larger economies. Turkey is now the 4th-largest market in terms of crypto transaction volume worldwide.
Crypto Regulations in Turkey
In 2020, Turkey ranked 14th among crypto investors worldwide, and the increased interest in crypto in Turkey has led many global crypto asset exchange platforms to open local operations.
In 2019, the Parliament passed the 11th Development Plan, which outlined the implementation of a blockchain-based digital central bank currency and the establishment of the Association of Payment Services and Electronic Money Institutions.
In April 2021, Turkey introduced its first legislation relating to crypto assets, known as the Regulation on the Disuse of Crypto Assets in Payments. This regulation does not outright prohibit crypto assets, but it does prohibit their usage directly or indirectly in payments. It also prohibits banks and payment institutions from developing business models related to crypto assets and acting as intermediaries for platforms providing crypto asset services.
Following amendments made to the Anti-Money Laundering Regulation in May 2021, crypto asset service providers and saving finance companies are now obligated to comply with anti-money laundering and counter-terrorism financing legislation.
The Presidency recently announced that a draft bill regarding the detailed regulation of crypto assets and platforms has been submitted to the Parliament for review and development. It is expected that a major piece of legislation on crypto assets will be introduced in Turkey in the near future.
Turkey’s crypto regulations aim to mitigate the risks associated with crypto trading, protect ordinary investors, and provide legal definitions for crucial terms like “crypto assets,” “crypto wallets,” and “crypto asset service providers.” Additionally, it will require crypto platforms to obtain licenses from Turkey’s Capital Markets Board (CMB).
Legal Status Overview
Cryptocurrencies like Bitcoin are legal in Turkey but come with certain boundaries established by the governing authorities, such as the Central Bank of the Republic of Turkey. Bitcoin, NFTs, mining, trading, and DeFi are all legal in Turkey.
Crypto Taxation Laws
The Ministry of Treasury and Finance is responsible for regulating crypto taxation in Turkey. VAT applies when cryptocurrency is used as payment, and income tax is incurred when it is held as a capital asset and sold profitably. Non-residents are subject to withholding tax on cryptocurrency payments, and profits from token sales are income-taxed based on the sale profit. Long-term capital gains from cryptocurrency held for over a year and sold profitably are taxed at a lower rate. Transactions also adhere to AML and KYC regulations, requiring investor identification.
Future Prospects and Challenges
It is clear that cryptocurrency and blockchain will become even more popular in the future. Presently, an estimated 5.5% of Turks own digital currency. Turkey’s high inflation rate, which recently surpassed 83%, and the decreasing purchasing power of the lira have led many to see digital currencies as a refuge. Cryptocurrencies are often referred to as the “savior” in Turkey, and there is hope for a better future for cryptocurrencies in the region.
Conclusion
With advancements in Turkey’s crypto sector every day, there is hope for a better regulatory framework for cryptocurrencies. 2024 could be a revolutionary year for the crypto scenario in Turkey, and we anticipate improvements in the days to come!
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Crypto Regulations