New Crypto Law in Turkey: What Obligations Await You?
Turkey's new crypto asset regulations aim to strengthen the legal framework and increase investor confidence. While efforts to regulate cryptocurrencies are accelerating around the world, Turkey's steps in this field are remarkable. The European Union's MiCA regulations and regulatory uncertainties in the United States are increasing global regulatory competition.
Recent developments, especially the SEC's lawsuit against ConsenSys, reveal the growing interest in crypto companies. SEC Chairman Gary Gensler stated that spot Ethereum ETFs will begin trading in July and emphasized the importance of transparency for investor decisions.
Let's take a closer look at this landmark crypto law in Turkey.
Understanding New Turkish Crypto Regulations: Key Responsibilities for Service Providers
Instead of enacting an independent crypto law in Turkey, the Grand National Assembly of Turkey preferred to regulate this field by making additions and regulations to the law no. 6362 regulating the capital markets.
Türk Büyük Millet Meclisi tarafından onaylanan kanunla birlikte, Türkiye’de faaliyet göstermeyi planlayan hizmet sağlayıcılar için yükümlülükleri belirten yazılı bir belge elde ettik. Ancak, kanunun uygulanması, denetim ve gözetim mekanizmalarının işleyişi, teknik detaylar ve diğer hususlar zamanla daha da netleşecektir. Bu yasa, ülkemiz için önemli bir başarıdır. Herkese hayırlı olsun.
The integration of cryptocurrencies into the global financial system has brought about important regulatory steps around the world. Turkey, which is seen as an extremely attractive market for cryptocurrencies, has taken a big step in this direction by creating a framework for crypto asset service providers with the recent amendments to the capital markets law. These changes present both opportunities and challenges.
Advantages, Precautions and Management Processes
While crypto currencies continue to be integrated into the global economy, Turkey has taken an important step with the changes it made to its capital market law. These changes bring new opportunities and challenges for crypto asset service providers. This newsletter examines the key points of the new law and how to navigate this changing regulatory landscape.
“Maintaining Law, Transparency and Predictability While Keeping Up with Rapidly Advancing Technological Developments.”
What the New Law Brings…
Recent amendments to the Capital Markets Law create a clear regulatory framework for crypto asset service providers and platforms. The introduction of licensing requirements promotes transparency and legitimacy by ensuring that crypto assets operate on a legal basis.
Cryptoasset service providers must take robust security measures and establish internal controls to manage systems securely and protect against possible cyber threats.
For establishment and activity, it is mandatory to obtain a license from the Capital Markets Board.
Compliance with the criteria and regulations set by TÜBİTAK is also necessary, as this ensures reliability and high standards by supporting the safe and efficient management of technological infrastructures.
WHAT THE NEW LAW INTRODUCES AND BASIC OBLIGATIONS
– Creates a clear regulatory framework for crypto asset service providers and platforms.
– Introduces licensing requirements to ensure legal activity and promote transparency and legitimacy.
– It requires establishing solid security measures and internal control units to manage systems securely and protect against possible cyber threats.
– It requires compliance with the criteria determined by TÜBİTAK to ensure reliability and high standards.
Cryptoasset service providers must implement strong security measures and establish internal controls to manage systems securely and protect against potential cyber threats.
In addition, existing crypto asset service providers are required to apply to the Board within one month from the date of entry into force of the law, along with the documents determined by the Board. This application must be made in order to comply with the secondary regulations to be issued in accordance with Articles 35/B and 35/C of the law, to obtain the necessary business license or to take a liquidation decision within three months without harming customer rights and interests and not to accept new customers during the liquidation process.
Those who want to start operating after the entry into force of this law must apply to the Board before starting their activities and declare that they will comply with the conditions specified in the secondary regulations and obtain the necessary operating license.
WHAT THE NEW LAW TAKES…
Photo by Herbert Goetsch on Unsplash
Higher Compliance Costs: New regulations may increase compliance costs for cryptoasset service providers. Licensing and regulatory requirements can pose a financial burden, especially for small and medium-sized businesses.
Market Dynamics: High regulatory standards may prompt some crypto firms to move their operations abroad. This could slow capital inflows from countries with regulatory uncertainties, such as the United States.
Transition Period: The process of adapting existing crypto asset service providers to new regulations may create operational challenges. Maintaining customer service during this time can be difficult.
What should be done?
Photo by Volodymyr Hryshchenko on Unsplash
-Securing the Technical Infrastructure: Service providers must secure their technical infrastructure against all kinds of risks in order to avoid losses that may occur due to hacking or cyber attacks.
– Careful Creation of Company Structures: Partnership structures in company establishments must be created carefully and partners and managers must have the legally required qualifications.
– Payments to TÜBİTAK and CMB: 1% of the revenues must be paid to TÜBİTAK and the Capital Markets Board.
– Preparation of Reports and Information: Many reports and information must be prepared and submitted upon management requests.
– Compliance with Controls and Inspections: In case of non-compliance with controls and inspections, administrative sanctions will be faced.
– Segregation of Customer Funds: Service providers must keep customer funds in banks and separate customer cash and crypto assets from their own assets.
Photo by Shubham Dhage on Unsplash
Global Perspective: Balancing Innovation and Adaptation
While efforts to regulate cryptocurrencies are accelerating around the world, Turkey's steps in this field are remarkable. The European Union's MiCA regulations and regulatory uncertainties in the United States are increasing global regulatory competition. Turkey's new regulations could potentially increase investor confidence by strengthening the legal framework for crypto assets in the country, as well as spooking global actors. In this context, the necessity that competition should be fair and the regulation compatible with the requirements of technology should not be overlooked.
Recent developments, especially the SEC's lawsuit against ConsenSys, reveal the growing interest in crypto firms. While the SEC alleges that MetaMask acted as an unregistered securities dealer and that its staking services violated securities laws, this action may appear to be part of the SEC's effort to broadly classify crypto activities as securities. This can be considered as one of the steps of the SEC towards becoming an important actor in the market actors or ecosystem.
At the beginning of 2024, the US Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETF applications. This was a milestone development for the crypto world. SEC now seems to want to show the world that it wants to be an active actor again. Finally, SEC Chairman Gary Gensler gave information about the status of spot Ethereum ETFs and emphasized that there is no problem with the first spot Ethereum ETFs to be launched in the USA, and that the comprehensive statements made by asset managers are extremely important for investor decisions. Gensler also stated that these ETFs will begin trading in July. We will all see how this global market will be shaped by local and national laws and practices. We continue to follow the developments closely.
Additionally, while highlighting the SEC's stance on crypto, Gensler stated: “The American people are not receiving the appropriate disclosures that they are required by law to receive, but they need them.” This statement demonstrates the SEC's commitment to ensuring transparency and investor protection in the crypto market.
Turkey's new regulations present both opportunities and challenges for crypto asset service providers. While detailed and clear regulations support the development of the sector, compliance costs and market dynamics require careful management. This comprehensive regulatory framework aims to increase security, transparency and trust in the Turkish crypto market.
The SEC's actions underscore the importance of having a robust regulatory framework that can adapt to rapid developments in the crypto industry. Turkey's approach, which includes licensing requirements, customer protection measures and compliance with TÜBİTAK standards, provides a strong example. However, potential operational and financial pressures on smaller service providers should be managed carefully.
Türkiye’nin yeni düzenlemeleri, kripto varlık hizmet sağlayıcıları için önemli kriterler ve yükümlülükler getirmektedir. Sürekli ve düzenli denetimlere dayanıklı olma zorunluluğu, sektör güvenliğini artırmayı amaçlamaktadır. Uyum ve hukuki değerlendirmelerin, bu değişen ortamda yön bulmak için ne denli önemli olduğunu önümüzdeki süreçlerde göreceğiz. Bu yeni kanunun getireceği yeni dönemde biz teknoloji hukukçularına büyük iş düşeceği açıktır.
Key areas include establishing legal and technological infrastructures, managing the licensing process, ensuring compliance, ensuring the security of personal data, protecting consumer rights, structuring companies, sharing responsibility, ensuring data and cyber security, auditing state monitoring mechanisms and preventing sanction risks.
These legal processes are vital to ensure the integrity and security of crypto transactions, protect stakeholders, and ensure regulatory compliance. Navigating this new landscape will require rigor and expertise to ensure the crypto ecosystem remains secure, transparent and compliant.
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