Turkey is edging closer to issuing digital asset rules, minister says

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Turkey has reached the final stage of its technical studies on digital asset regulations and will publish its draft rules soon, the country’s finance minister has confirmed.

The draft regulations will cover digital asset exchanges and are aimed at protecting investors and introducing operating standards, Treasury and Finance Minister Mehmet Şimşek said in an interview with the state-owned broadcaster Anadolu Agency.

“Our primary goal with cryptocurrency asset regulation is to make this area safer and eliminate potential risks. Our approach is not restrictive; it is based on eliminating uncertainties and controlling possible risks,” Şimşek told the outlet.

Turkey is one of the world’s largest digital asset hubs, and as the value of the lira has depreciated in the past few years, this adoption has spiked. The country ranked 12th in digital asset adoption last year and second in Europe, according to Chainalysis. It ranked fourth globally and second in Europe for transaction volume in 2023 with $170 billion.

However, the country has yet to implement regulations for the industry. This makes the draft rules critical, with the minister noting that they will curb platform misuse. Turkey was home to Thodex, an exchange that went down with $2.6 billion in user funds. The founder, Faruk Fatih Özer, was sentenced to 11,000 years in prison in 2023.

“Therefore, we are taking steps to reduce the risks for those engaging in transactions with crypto assets in our country, similar to international practices,” the minister said.

Exiting the FATF Grey List

The draft rules are also aimed at helping the country in its quest to exit the Financial Action Task Force (FATF) grey list, Şimşek added. FATF added Turkey to the list in November 2021, warning the country to tackle “complex money laundering cases and show it is pursuing terrorist financing prosecutions.”

In 2023, it emerged that Turkey had dealt with all but one of the 40 recommendations by the FATF—digital assets. The draft rules are meant to remedy this, allowing the country to exit the list, which affects a country’s ability to attract investment and loans from global institutions.

Under the new rules, exchanges will have to obtain a license from the Capital Markets Board and will be required to meet operational requirements similar to financial institutions.

“These will include conditions related to founders and managers, organizational obligations, capital requirements and information technology infrastructure obligations,” Şimşek said.

The minister revealed that the new draft rules define ‘crypto’ as “intangible assets created and stored electronically using distributed ledger technology or similar technology, distributed through digital networks, and capable of representing value or rights.”

In formulating the draft rules, Turkey studied global regulatory trends, but as the minister disclosed, no country has taken a definitive lead in digital asset oversight. Europe has made strides with its MiCA framework; Japan’s FSA has been active in digital asset oversight; South Korea welcomed the first of its two-part regulatory framework in July; and Germany’s BaFin has guidelines that cover novel use cases like DeFi. However, none has issued comprehensive regulations.

“At this stage, when we look at foreign practices regarding crypto assets, we see that countries are progressing by adopting approaches suitable for their own financial and legal systems. In this sense, it becomes clear that steps need to be taken in our country regarding such regulation,” the minister noted.

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