Blockchain&Cryptocurreny Regulation 2023 – Türkiye/Turkey

November 10, 2022 Genel

Government attitude and definition

Cryptocurrency/Government Stance

Turkey represents one of the globe’s most active crypto adoption markets, with over 5 million citizens owning digital assets as of 2020. The nation currently lacks formal investor safeguards for crypto holdings. However, authorities are developing draft legislation to amend Capital Markets Law No. 6362, targeting regulation of crypto asset service providers (CASPs), trading platforms, wallets, and custody arrangements for the first time.

Crypto Asset Definition

Under the Central Bank Regulation (effective April 30, 2021), crypto assets are characterized as “intangible assets representing value or rights, created and stored virtually through distributed ledger technology” rather than classified as capital market instruments. This distinction creates a separate legal framework than traditional securities.

The regulation distinguishes crypto from e-money, with the Banking Regulatory and Supervisory Authority (BRSA) implicitly excluding Bitcoin from e-money definitions. Stablecoins theoretically could qualify as e-money if issuers meet applicable requirements, though the Central Bank’s payment prohibition complicates this classification.

Central Bank and Government-Backed Assets

No regulations currently govern government or central bank-issued crypto assets. However, the Central Bank established the “Digital Turkish Lira Collaboration Platform” in September 2021 with research institutions, advancing a central bank digital currency (CBDC) initiative. BiLira, a private Turkish Lira-backed stablecoin, operates independently on blockchain networks.

Cryptocurrency Regulation

Central Bank Payment Restrictions

Articles 3.2 and 3.3 of the Central Bank Regulation explicitly prohibit direct and indirect crypto payments. Payment service providers (banks, payment companies, e-money institutions) cannot cooperate with crypto business models or provide services enabling crypto usage in payments or e-money issuance.

However, bank collaboration with CASPs for fiat-to-crypto and crypto-to-crypto transaction integration services remains permissible, as the restriction applies specifically to payment functionalities.

Draft Legislation Framework

The Unofficial Draft Legislation establishes several expected principles:

  • CASPs require Capital Markets Board (CMB) operating licenses
  • CMB authority expands to designate tradeable crypto assets and issue secondary regulations
  • Unauthorized CASP activities and solicitation to Turkish residents face criminal consequences
  • TUBITAK (Scientific and Technological Research Council) evaluates crypto asset technical specifications
  • Citizens retain self-custody rights or may use CMB-licensed custodians and eligible banks
  • “Grandfathering” provisions permit existing Turkish CASPs transition periods before secondary regulations take effect

The draft abandons earlier restrictive approaches toward unhosted wallets, aligning with Financial Action Task Force (FATF) anti-money laundering standards.

Sales Regulation

No dedicated regulations govern crypto asset or token sales. The CMB’s 2018 bulletin addresses Initial Coin Offerings (ICOs), characterizing them as speculative, high-risk offerings advertised through white papers. ICO regulatory treatment depends on case-by-case assessment of whether tokens represent company shares, project stakes, service access rights, or tangible assets.

The CMB notes ICOs resemble public offerings and crowdfunding but fall outside the 2021 Crowdfunding Communique scope. Current uncertainty surrounds derivative products and staking services—the CMB may classify crypto derivatives as securities under Capital Markets Law, potentially rendering unauthorized distribution criminal.

Taxation

Taxation Framework

Turkey’s constitutional taxation principle requires legislative enactment for tax obligations. Currently, no specific crypto asset tax regime exists, creating uncertainty about whether crypto fits existing tax structures.

Income and Corporate Taxation

All income, regardless of source, theoretically faces income taxation. Yet the Income Tax Law contains no provisions governing crypto-generated income declarations or holdings. From a corporate perspective, crypto asset nature determines taxation: if classified as securities, gains become commercial income subject to standard principles; if commodities, continuity determines whether gains constitute commercial or incidental income.

The Edirne Tax Office’s 2020 opinion characterized Bitcoin as a commodity under Inheritance and Transfer Tax Law Article 3.1, subject to inheritance tax. However, this conclusion without statutory crypto definition contradicts the legality principle of taxation.

Value-Added Tax

VAT treatment depends on crypto classification. Crypto exchange transactions likely constitute money remittance activities (outside VAT scope), but commissions from wallet services and clearing services provided to third parties constitute taxable supplies.

Money Transmission Laws and Anti-Money Laundering

AML/CTF Requirements

Law No. 5549 and the Regulation on Measures establish AML/CTF standards, with the Financial Crimes Investigation Board (FCIB) supervising compliance. Presidential Decree No. 3941 (May 1, 2021) expanded the Regulation’s scope to include CASPs as “obliged parties.”

CASPs must comply with:

  • Customer due diligence and Know-Your-Customer (KYC) procedures
  • Suspicious transaction reporting to FCIB
  • Information and document provision upon request
  • Eight-year retention of customer transaction records
  • Reporting transactions exceeding Ministry-determined thresholds

FCIB Guidance

The AML Guide clarifies CASP obligations. KYC verification must confirm individuals’ names, surnames, birth dates, identification numbers, and document types before contract establishment. Address verification requires residence certificates or recent utility bills. FCIB imposed approximately €1.125 billion in administrative fines on major CASPs in February 2022 for AML/CTF non-compliance.

The Suspicious Transactions Guide (effective April 18, 2022) requires reporting suspicious transactions within ten days maximum, or immediately for urgent cases. Reports submitted via wet signature, registered email, or the EMIS.ONLINE system must include transaction amounts, owner identification, and suspicion justification. CASPs preserve copies for eight years.

Simplified KYC Procedures

CASPs meeting specific conditions under FCIB Communique No. 5 may utilize simplified KYC measures:

  • Executing electronic collection/payment agreements with Turkish banks
  • Conducting all transactions through compatible bank or credit card accounts
  • Verifying customer identity through the Ministry of Internal Affairs’ identity sharing system

Simplified procedures eliminate requirements for signature samples and physical identity documents, though most Turkish CASPs continue collecting traditional documentation.

Promotion and Testing

No current sandbox or crypto-specific incentive programs exist. However, Istanbul Financial Center Law No. 7412 (effective June 22, 2022) aims to establish an innovation hub for fintech development. The Finance Office’s 2021 Annual Report indicates a regulatory sandbox, located within the Istanbul Financial Center, will facilitate fintech product testing and policy development.

Ownership and Licensing Requirements

Capital market regulations contain no provisions permitting investment managers to hold crypto assets for investment purposes. The CMB’s November 27, 2021 decree prohibits collective investment funds and exchange-traded funds from holding crypto assets, crypto-backed products, or CASP shares.

The Unofficial Draft Legislation empowers the CMB to establish procedures for crypto asset investment advisory and portfolio management. Post-enactment, individuals and institutions operating without CMB licenses face penalties.

Mining

Crypto mining currently remains unregulated and falls outside Capital Markets Law definitions. As ecological concerns grow, blockchain projects increasingly adopt proof-of-stake (PoS) consensus, potentially warranting different regulatory assessments than proof-of-work (PoW) systems.

Staking Activities

On-chain staking directly on PoS blockchains, performed by validators without surrendering private keys, technically differs from custodial staking (where users provide keys to CASPs for interest-bearing returns). While staking rewards theoretically could qualify as “deposit” interest under Banking Law No. 5411, crypto assets’ exclusion from money definitions prevents deposit account classification. Consequently, staking taxation and regulatory treatment remain unclear—potentially falling under Capital Markets Law, Banking Law, or separate legislation.

Border Restrictions and Declarations

Turkish law imposes no border restrictions or mandatory crypto holdings declarations.

Reporting Requirements

Since CASPs and customers maintain continuous business relationships per the AML Guide, CASPs must provide ongoing information to FCIB alongside suspicious transaction reports. Beyond suspicious activity reporting, no specific provisions govern crypto payment reporting requirements for CASPs or transaction parties.

Estate Planning and Testamentary Succession

Turkish inheritance law contains no established provisions addressing crypto assets in estates. Given definitional ambiguity regarding crypto’s nature, uncertainty persists about whether crypto constitutes inherited property. The anonymous nature of crypto complicates identification and collection unless the deceased’s private keys remain accessible.

The Edirne Tax Office’s 2020 opinion accepted Bitcoin as a commodity subject to inheritance and transfer taxation upon deceased estates. However, without statutory rules clarifying crypto taxation treatment, this conclusion contradicts the legality principle.

The Antalya Regional Court of Justice (November 13, 2020) defined “digital assets” as content existing solely in digital form—videos, photos, emails, social media accounts—ruling such assets constitute digital heritage subject to inheritance succession. Should crypto assets qualify as “digital assets,” inheritance inclusion becomes possible.

Authors: Att. Alper ONAR, Att. Emre SUBAŞI