Turkey’s Crypto Framework to be Developed by 2024

The Turkish government aims to establish crypto regulations within the country by the end of 2024, according to the 2024 Turkish Presidential Annual Program published in the Official Gazette of the Republic of Turkey on October 25. The program, which spans almost 500 pages, includes a specific section called Article 400.5 that outlines the planned studies to define crypto assets and determine the appropriate taxation guidelines. Furthermore, the document states that legal definitions for crypto asset providers, including crypto exchanges, will also be established. However, specific details about the proposed regulations are not provided in the document.

This move comes after the abrupt collapse of Thodex, a popular Turkish crypto exchange, in 2021. Former CEO Faruk Fatih Özer was sentenced to 11,196 years in prison by a Turkish court in September 2023. The incident highlighted the need for stricter regulations and oversight in the crypto industry in Turkey. The government’s efforts to establish clear guidelines for crypto assets and providers are crucial to prevent similar incidents and protect investors.

Turkey has shown significant interest in cryptocurrencies in recent years. In a 2022 study, Turkey ranked as the second country in the world with the highest number of crypto-related search requests. Approximately 5.5% of the population in Turkey showed interest in cryptocurrencies, reflecting the growing curiosity and adoption of digital assets. The country also witnessed a significant elevenfold increase in crypto usage in 2021, driven by the ongoing inflation crisis of the Turkish lira. Cryptocurrencies offer an alternative store of value and a potential hedge against inflation, making them an attractive investment option for many Turks.

In addition to crypto regulations, Turkey has also been exploring the potential of a central bank digital currency (CBDC). In December 2022, the Central Bank of the Republic of Turkey conducted the first trial of its digital lira, signaling its interest in digitalizing the country’s currency. The government has yet to make a definitive commitment to a fully digitalized currency, but President Recep Tayyip Erdoğan has expressed support for the digital lira project on multiple occasions. Continued testing of the CBDC throughout 2024 demonstrates Turkey’s efforts to innovate its financial infrastructure and adapt to the evolving digital landscape.

Establishing comprehensive crypto regulations is essential for Turkey to foster a secure and transparent crypto ecosystem. Clear guidelines will provide legal certainty for market participants and protect investors from potential fraud or scams. Moreover, it will enable the Turkish government to monitor and regulate the crypto industry effectively, ensuring compliance with anti-money laundering and terrorist financing regulations. The 2024 Turkish Presidential Annual Program marks a significant step towards achieving these goals and creating a favorable environment for crypto innovation and investment in Turkey.

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