Turkey is set to intensify its regulatory framework for cryptocurrencies, targeting an exit from the Financial Action Task Force’s (FATF) ‘grey list.’ The move involves implementing stricter licensing requirements and taxation policies in the crypto sector, according to information obtained by Reuters from sector officials.
Crafting a New Regulatory Regime
Local representatives from the crypto market indicate that Ankara is developing a new regulatory regime aimed at preventing system abuse. This initiative includes imposing licensing standards, capital adequacy requirements, and compliance metrics for custody services, such as proof of reserves.
Although these regulatory changes are pivotal, they are not expected to be implemented until sometime in 2024. The Turkish government previously announced that crypto regulation would be a key agenda item for the coming year.
Turkey’s Crypto Regulation Journey
Turkey has been considering cryptocurrency regulation since at least May 2022. The governing AK Party, led by President Recep Tayyip Erdogan, suggested a minimum capital requirement of 100 million liras (equivalent to $3.4 million) for crypto businesses. However, this proposal has yet to be publicly discussed.
In a significant development, Turkey’s Finance Minister Mehmet Şimşek announced the introduction of crypto legislation in early November 2023. Addressing the nation’s planning and budget commission, Şimşek revealed that Turkey has met 39 of the 40 FATF standards and is nearing complete compliance.
Impact of Grey List Status
Since 2021, Turkey has been on the FATF’s ‘grey list,’ which has adversely affected confidence in its fragile economy. With high inflation rates, cryptocurrencies have become a popular alternative financial refuge in Turkey.
Turkey’s ambitious move towards enhanced crypto regulation underlines its commitment to global financial standards. As the country edges closer to full compliance with FATF regulations, the crypto landscape in Turkey is poised for significant transformation.