New Regulations for Crypto Assets and Service Providers in Turkey: Key Changes and Updates
New Regulations for Crypto Assets and Service Providers in Turkey: Key Changes and Updates
New Regulations for Crypto Assets and Service Providers in Turkey: Key Changes and Updates
Introduction to the New Legal Framework for Crypto Assets
The Turkish Capital Markets Law No. 6362 ("CML") has introduced new regulations for crypto assets and crypto asset service providers ("CASPs"). Following the Capital Markets Board's ("CMB") principle decisions dated August 8, 2024, and September 19, 2024, the Financial Crimes Investigation Board ("MASAK") published changes to its legislation on December 25, 2024, via the Official Gazette. These changes include the recognition of CASPs as "financial institutions," along with several new obligations such as recording sender and receiver information for crypto asset transfers, compliance programs, e-notifications, customer identification, and remote identity verification.
These regulatory updates aim to ensure that crypto assets are subject to stringent legal oversight and traceability, making the crypto market more transparent and secure for users.
Key Highlights of the MASAK Legislation and Changes:
- CASPs as "Financial Institutions" under MASAK's Framework
CASPs are now classified as "financial institutions" under MASAK regulations. With this classification, CASPs will face increased obligations similar to those of banks and intermediary institutions. They are required to implement risk-based measures to monitor transactions, establish risk management systems, and take precautionary actions against technological risks. Regulations regarding third-party trust, international reporting relationships, and dealings with high-risk countries are also applicable to CASPs.
- CASPs Must Establish Compliance Programs and Appoint a Compliance Officer
As part of the updated legislation, CASPs must create a compliance program and appoint a compliance officer. The compliance program must include institutional policies and procedures, risk management activities, monitoring and control functions, training activities, and internal audits. CASPs must submit commitment forms to MASAK by January 25, 2025, for compliance with these new obligations.
- Details of Crypto Asset Transfers and New Reporting Requirements
For crypto asset transfers, CASPs must record detailed sender and receiver information for transactions over 15,000 TL. This includes:
Sender's name and surname or business name
Wallet address or transaction reference number
Customer identification information such as address, birth date, nationality, passport number, or tax identification number
Additionally, all CASPs involved in the transfer chain must ensure that these details are verified and included in every message along the transfer's path, ensuring the traceability of crypto asset transactions.
- E-Notification System for CASPs
CASPs must register with MASAK for e-notification accounts by January 25, 2025. From this date, they are required to receive official communications electronically, aligning them with the existing infrastructure for digital communication in Turkey.
- Clarifications on Customer Identification (KYC) for CASPs
CASPs are now required to conduct KYC procedures for any crypto asset transfers of 15,000 TL or more. They must ensure that they identify the real beneficiaries of transactions and apply the necessary safeguards.
- Remote Identity Verification for CASPs
CASPs are required to conduct remote identity verification in line with the methods and principles set by MASAK, until special regulations for remote identity verification in crypto assets are established.
- Tighter Identification Measures for Privacy-Based Crypto Assets
CASPs facilitating the trading or custody of privacy-based crypto assets are prohibited from conducting remote identity verification. Furthermore, initial financial transactions, including deposits and withdrawals, must be made through accounts consistent with the client's identity information.
Financial Reporting Standards Changes
On December 19, 2024, the Public Oversight, Accounting and Auditing Standards Authority ("KGK") published regulations in the Official Gazette that affect financial reporting standards for crypto assets. These regulations emphasize that crypto assets are not classified as fiat, electronic money, payment instruments, securities, or other capital market instruments.
The changes also address the measurement, classification, and reporting of crypto assets in financial statements, specifically adding a "Digital Assets" category to the balance sheets. Detailed footnote disclosures about crypto assets are now required.
Conclusion
These regulatory changes are designed to make crypto asset transactions more transparent, traceable, and secure, addressing concerns about money laundering, terrorist financing, and the informal economy. The implementation of these regulations, along with the CML and CMB's principle decisions, marks a significant step towards a more structured and regulated crypto market in Turkey. Further regulatory updates are expected as the crypto landscape continues to evolve.
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