Turkey is considering new regulations for the digital asset space that will focus on licensing and taxation, senior government officials have confirmed.
The country is one of the world’s top digital asset hubs, with Chainalysis ranking it fourth behind the United States, India, and the United Kingdom for transaction volume and 12th for adoption. However, it has yet to formulate regulations for the budding sector despite this being one of the recommendations by the Financial Action Task Force (FATF).
These regulations could finally be implemented next year, a senior government official told Reuters.
The move follows a pledge by Finance Minister Mehmet Simsek in October that the government would work on digital asset regulations soon to comply with the FATF recommendations.
FATF downgraded Turkey to the money laundering grey list in 2021 and issued 40 recommendations for the Eastern European nation. Simsek told parliament that Turkey was found compliant on all but one—its handling of digital assets.
While the FATF isn’t a law-making body, its classifications affect a country’s ability to attract foreign investment and loans from financiers like the International Monetary Fund (IMF) and the World Bank. Other countries currently on the FATF’s grey list include Croatia, the Philippines, Nigeria, the United Arab Emirates, and Vietnam.
Regulating digital currencies is, therefore, on top of Turkey’s agenda for 2024.
“Introducing certain licensing standards will be one of the top priorities in the new regulation,” commented Bora Erdamar, the director of local blockchain research firm BlockchainIST Center. He believes the new regulations will prevent “abuse of the system.”
Turkey’s adoption of digital assets has skyrocketed in the past few years as locals seek alternatives to the rapidly depreciating lira. Since March this year, the lira has lost 53% of its value against the dollar.
“Turkey has a great potential in blockchain technology and cryptoassets… A reasonable taxation policy, that will not scare off investors, will strengthen and reinforce trust for the sector,” Erdamar commented.
While the new regulations will be unveiled within the next few months, Onur Altan Tan revealed that they have been in the works for over two years.
Tan, who is a board member at local digital asset platform Fexobit, told Reuters, “There’s been more than two years of work done on this regulation, including consultation meetings with cryptocurrency exchange firms, so it should be ready to be submitted to the parliament.”
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