Turkey Introduces New Crypto Legislation to Strengthen Compliance with FATF
The Turkish ruling party has recently presented a proposed cryptocurrency bill to the parliament, which focuses on regulating and licensing crypto service providers. The aim is to bring Turkey in line with international standards and improve its relationship with the Financial Action Task Force (FATF), the global organization that monitors money laundering and terrorist financing.
Turkey’s efforts to improve its position with the FATF began after it was downgraded to the gray list in October 2021. This downgrade was a result of Turkey’s failure to implement sufficient measures to combat money laundering in sectors such as banking and real estate. Countries on the gray list must actively cooperate in addressing these deficiencies and are subject to increased scrutiny.
The proposed legislation seeks to regulate crypto trading platforms and other service providers in the sector. It will require these entities to obtain licenses from Turkey’s Capital Markets Board (CMB). The CMB will be empowered to establish guidelines and secondary regulations for crypto asset service providers and transactions.
The need for tighter regulation in the crypto sector is emphasized in the draft bill, especially in light of recent bankruptcies of smaller trading platforms. The capital city, Ankara, has been working on developing crypto legislation for over two years.
According to a report from Reuters, the bill aims to update existing laws and comprehensively govern the crypto market. It covers various aspects, including the regulation of crypto asset service providers, platform operations, storage, and the buying, selling, and transfer of crypto assets by Turkish residents. The bill’s key focus areas include consumer protection, platform transparency, and compliance with financial regulations.
The proposed legislation also includes the travel guidelines issued by the FATF. These guidelines require crypto companies and financial institutions involved in digital asset sales, collectively known as Virtual Asset Service Providers (VASPs), to obtain and share accurate information about the originator and beneficiary of transactions with their counterparts or other financial institutions.
Earlier this year, sources revealed that the FATF team had a meeting with Turkish officials ahead of its upcoming report in June. The Turkish government hopes that the implementation of the new regulations will lead to an upgrade from the FATF.
In summary, Turkey’s draft crypto bill aims to strengthen its regulatory framework and align with international standards to improve its relationship with the FATF. The bill’s focus on licensing, regulation, and adherence to FATF guidelines demonstrates the country’s commitment to mitigating risks and promoting transparency in the crypto sector.