Turkey to Discuss Cryptocurrency Regulation in Parliament This Week

Key Insights:

  • The new Turkish regulation requires crypto exchanges to obtain licenses from the Capital Markets Board to ensure secure trading.
  • Unauthorized crypto service providers face severe penalties, including imprisonment for up to five years.
  • The regulation specifies that crypto asset providers must secure their systems according to TÜBİTAK standards.

This week, the Turkish Parliament will discuss the proposed regulatory framework for cryptocurrencies. On May 17th, the Parliamentary Planning and Budget Commission will review the proposed legislation. The aim is to establish clear legal definitions and oversight mechanisms for Turkey’s burgeoning crypto market.

The regulation will amend the Capital Markets Law to include crypto assets, providing a legal definition for these digital currencies. The Capital Markets Board (CMB) will oversee the establishment and activities of crypto asset service providers and require them to obtain official permission to operate.

Key Provisions in the Proposed Legislation

Crypto exchanges will need to secure a license from the CMB. This measure is designed to ensure a secure trading environment under strict regulatory supervision. Furthermore, crypto asset service providers must secure their information systems. The Turkish Scientific and Technological Research Council (TÜBİTAK) will set specific technological criteria for these systems.

The CMB will have the authority over the issuance, sale, and distribution of crypto assets. A preliminary report from TÜBİTAK will be necessary for any new crypto asset issuance. This standardization aims to protect investors from fraud and market manipulation.

Contracts that limit crypto asset service providers’ liability to their customers will be invalid. The regulation will establish mechanisms to handle investor complaints and objections. Additionally, measures will be implemented to prevent market-distorting activities.

The CMB will also regulate the procedures and principles for crypto investment consultancy. Customer assets will be protected from seizure due to crypto exchange debts. The CMB will monitor and act against exchanges operating without permission.

Providing crypto asset services without authorization will be considered a criminal offense, punishable by three to five years of imprisonment. Existing crypto asset service providers will have a transition period to comply with the new regulations. They must apply to the CMB within one month or decide on liquidation within three months. Foreign crypto asset providers will have to cease operations within this transition period.

Regarding taxation, the bill specifies that one percent of all revenues from crypto platforms, excluding interest income, will be paid to the CMB. Another one percent will go to the TÜBİTAK budget by the end of May each year. However, the proposed law does not include tax regulations for end users who trade on these platforms.

The Turkish Parliament’s move to regulate cryptocurrencies marks a significant step towards formalizing the country’s crypto market. By ensuring stringent oversight and security measures, the legislation aims to create a safer environment for investors and prevent fraudulent activities in the crypto space.

This comprehensive regulation reflects Turkey’s efforts to bring clarity and security to its cryptocurrency market. The proposed framework aims to protect investors, standardize crypto-asset issuance, and establish clear guidelines for the operation of crypto exchanges and service providers.

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