Blockchain&Cryptocurreny Regulation 2024 – Türkiye/Turkey

January 10, 2024 Genel

Government attitude and definition

Government attitude towards crypto assets

Türkiye is one of the largest and fastest crypto adopters globally. It was estimated that over 5 million people currently own cryptocurrency in Türkiye according to the Crypto Currency Research Report published by the Information Technologies and Communication Authority of Türkiye in May 2020. Currently, there is no legal investor protection scheme for crypto assets. However, the government is working on an Unofficial Draft Legislation on crypto assets and crypto asset service providers (“Unofficial Draft Legislation”) amending Capital Markets Law No. 6362 (“CML”). Although there is no official press release regarding the timeline of the Unofficial Draft Legislation, it is expected to be submitted to the Grand National Assembly of Türkiye within the short term and will impose additional requirements for crypto asset service providers (“CASPs”) operating in Türkiye. In general, the Unofficial Draft Legislation aims to regulate crypto assets, crypto asset trading platforms, crypto wallets, crypto asset custody services and CASPs in Turkish legislation for the first time.

The Central Bank of the Republic of Türkiye issued the Regulation on the Disuse of Crypto Assets in Payments, which went into effect on April 30, 2021 (“Central Bank Regulation”), defining crypto assets as “an intangible asset representing a value or right that can be created and stored virtually through distributed ledger technology or similar technology and distributed over digital networks.”

Key Principles of Draft Legislation

The anticipated framework includes:

  • CASPs must obtain operating licenses from the Capital Markets Board (CMB)
  • CMB authorization for issuing secondary regulations
  • Criminal penalties for unauthorized capital markets activity
  • Self-custody rights for crypto asset holders
  • TÜBİTAK authority to evaluate technical specifications
  • Framework agreements governed by CMB regulations
  • “Grandfathering” transition period for existing platforms
  • Allowance for self-hosted wallets aligned with FATF anti-money laundering standards

Definition of Crypto Assets

The Central Bank Regulation defines crypto assets as intangible assets created through distributed ledger technology, explicitly excluding money, electronic money, payment instruments, or capital markets instruments.

An Istanbul court ruled crypto assets meet seizure criteria as commodities based on economic value, despite definitional contradictions with the Central Bank Regulation.

Central Bank and Government-Backed Assets

No regulations currently govern government or central bank-backed crypto assets. However, Turkey announced the Digital Turkish Lira R&D Project in September 2021, establishing a collaboration platform with ASELSAN, HAVELSAN, and TÜBİTAK-BİLGEM to explore blockchain implementation and distributed ledger applications.

BiLira, a private initiative, operates as Turkey’s first Turkish Lira-backed stablecoin on blockchain.

Cryptocurrency Regulation

The Central Bank Regulation prohibits direct or indirect crypto asset use for payments but excludes purchase, sale, custody, and exchange platform services from restrictions.

The Istanbul Enforcement Law Court determined that crypto assets qualify as seizable property, comparing their economic characteristics to securities despite definitional disagreements.

Following the Central Bank Regulation, the Amendment to the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime (May 1, 2021) imposed specific anti-money laundering obligations on CASPs under Law No. 5549.

Sales Regulation

No specific legislation governs crypto asset sales. The CMB’s 2018 bulletin addressed initial coin offerings (ICOs), characterizing them as speculative, high-risk ventures resembling public offerings.

The CMB indicated that ICOs potentially constitute “unauthorized capital markets activity,” though the Crowdfunding Communique (published October 2021) does not cover ICOs.

Industry debate continues regarding derivative instruments and staking services. Derivative instruments are defined under the Capital Markets Law as “instruments the values of which depend on the price or return of a security, commodity or underlying asset and/or depend on an index level.” The CMB may classify crypto derivatives as securities, subjecting providers to unauthorized capital markets activity penalties: “imprisonment from two years up to five years and be punished with a judicial fine from five thousand days to ten thousand days.”

Taxation

Turkish taxation operates under the constitutional principle of legality—taxes must be enacted legislatively. Currently, no specific tax regime governs crypto assets.

Income Tax

All income types face income taxation regardless of nature. However, no specific Income Tax Law provisions address crypto-generated income. Tax liability arises only upon income realization from asset sales; holding assets creates no tax obligation.

Corporate Tax

Taxation depends on crypto asset classification. If classified as securities, taxation follows securities principles with losses offsetting profits. If classified as commodities, continuous trading activity creates commercial income; occasional transactions constitute incidental gains.

Inheritance and Transfer Tax

An Edirne Tax Office opinion (September 23, 2020) characterized Bitcoin as a commodity under Article 3.1 of Inheritance and Transfer Tax Law No. 7338, making holdings subject to inheritance tax upon death.

Value-Added Tax

Crypto transactions exchanged for other virtual currencies or fiat currencies typically avoid VAT as money remittance transactions. However, commissions from wallet services and clearing services remain taxable under VAT Law No. 3065.

The Banks Association of Turkey’s Digital Assets Report (February 2022) suggests transparent taxation policies could strengthen direct and indirect tax revenues to the Treasury through increased transaction volumes.

Money Transmission Laws and Anti-Money Laundering Requirements

Law No. 5549 and the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism (January 1, 2008) establish AML/CTF standards. The Financial Crimes Investigation Board (FCIB), operating under the Ministry of Treasury and Finance, supervises compliance.

FCIB may conduct ex officio investigations and impose sanctions for non-compliance. In February 2022, FCIB imposed approximately €1,125 million in administrative fines on well-known CASPs for AML/CTF violations.

Presidential Decree No. 3941 (May 1, 2021) expanded the Regulation on Measures to include CASPs as “obliged parties” responsible for preventing money laundering and terrorist financing.

FCIB Obligations for CASPs

CASPs must:

  1. Conduct customer due diligence (Know-Your-Customer)
  2. Assess and report suspicious transactions
  3. Provide information upon request
  4. Retain customer documents for eight years
  5. Report transactions exceeding Ministry-determined thresholds

FCIB’s AML Guide for CASPs

FCIB published guidance clarifying CASP obligations:

  • KYC processes must complete before contract formation or transactions
  • Identity verification requires documentation of name, surname, birth date, identification number, and document type
  • Address verification uses residence certificates or recent utility invoices
  • Photocopy or electronic images of identity documents must be retained
  • Suspicious transaction reporting follows confidential procedures

Reporting distinguishes single transactions from multiple transactions reviewed collectively. A single Suspicious Transaction Reporting Form applies when multiple transactions collectively raise suspicion. Submissions occur through legal representatives physically or via EMIS.ONLINE. The procedure remains confidential except to FCIB inspectors or courts.

Suspicious Transactions Guide

FCIB’s latest guideline (effective April 18, 2022) requires reporting within 10 days maximum, or immediately in urgent cases. The Suspicious Transaction Reporting Form includes transaction amounts, owner identification, and suspicion justifications. Additional reports accompany new findings. Legal representatives access EMIS.ONLINE after submitting the Suspicious Transaction Reporting Commitment Form. Copies preserve for eight years whether submitted electronically or physically.

CASPs may request postponement if serious suspicion indicators exist, with appropriate justification.

FATF’s October 2021 updated guidance on Recommendation 15 clarified virtual asset “travel rule” standards. Turkey, a FATF member since September 24, 1991, may adopt regulations mirroring FATF or EU standards incorporating traceability, thresholds, and un-hosted wallet verification requirements.

Simplified KYC Procedures

Article 26 of the Regulation on Measures permits simplified measures. FCIB General Communique No. 5 (April 9, 2008) allows CASPs “required to carry activities exclusively in electronic environment” simplified KYC upon meeting conditions:

  • Execute agreements with Turkish banks for electronic collection and payment
  • Conduct all collections through bank or credit card accounts matching member identity
  • Verify customer information (name, surname, nationality, birth date, identification number) through the Ministry of Internal Affairs National ID database (NVI)

Signature sample collection becomes unnecessary when using simplified methods. Most operating CASPs still collect all Regulation-mandated documents, potentially raising Personal Data Protection Law No. 6698 liability issues regarding data minimization principles.

Article 2.2.10 does not govern non-resident identification, suggesting simplified KYC inapplicability for foreign, non-resident customers.

On November 23, 2022, FCIB issued an announcement regarding FTX Turkey, seeking approval to initiate investigations for money laundering and asset confiscation under Law No. 5549.

Promotion and Testing

Currently, no regulatory sandbox exists promoting crypto research and investment. However, Istanbul Financial Center Law No. 7412 (effective June 22, 2022) established the Istanbul Financial Center in 2023 as an innovation hub for fintech development.

Turkey’s Finance Office 2021 Annual Report on Fintech Ecosystem indicates a regulatory sandbox located in Istanbul Financial Center aims to improve fintech products, services, and business models. This structure facilitates innovative financial product development, competition stimulation, innovation, and evidence-based policy creation.

Ownership and Licensing Requirements

No specific provisions govern investment managers’ crypto asset ownership for investment purposes. However, collective investment funds and alternative investment funds cannot invest in crypto assets, crypto asset-backed products, or exchange-traded funds holding crypto assets or CASP shares (CMB Decree, November 27, 2021).

The Unofficial Draft Legislation authorizes CMB determination of investment advisory and portfolio management procedures for crypto assets. Upon enactment, unlicensed individuals and institutions operating in crypto asset industry face penalties and administrative measures subject to CMB supervision under the Capital Markets Law.

Mining

Mining regulation remains absent. Mining does not fall under the Capital Markets Law definition.

Given ecological concerns, blockchain projects increasingly adopt proof-of-stake (PoS) consensus rather than proof-of-work (PoW), potentially warranting different regulatory assessment.

Staking Considerations

Staking rewards on PoS blockchains might qualify as “deposit account interest” under Banking Law No. 5411. However, the Banking Law defines “deposit” as “money” accepted for return on set dates. Since the Central Bank Regulation excludes crypto assets from “money” classification, staking rewards should not constitute banking activity.

On-chain staking differs from custodial staking. On-chain staking involves direct network participation without surrendering private keys to third parties. Custodial staking involves providing private keys to CASPs for interest-bearing returns rather than natural PoS participation rewards.

Currently, no clear regulatory differentiation exists between on-chain and custodial staking activities, leaving unclear whether either falls under the Capital Markets Law, Banking Law, or other legislation.

Border Restrictions and Declaration

Turkish law imposes no border restrictions or crypto asset holding declaration obligations.

Reporting Requirements

The AML Guide establishes that CASP-customer relationships constitute “continuous business relationships” due to agreement-based transactions. CASPs must provide continuous information to FCIB, including suspicious transaction reporting per AML/CTF regulations while submitting regular reports. No specific reporting requirements exist for crypto asset payments beyond suspicious transaction reporting.

Estate Planning and Testamentary Succession

No established law governs crypto assets under Turkish inheritance law. Definitional ambiguity creates uncertainty whether crypto assets comprise deceased estates. Anonymous asset nature complicates identification and collection unless private keys or passwords transfer to heirs.

The Edirne Tax Office opinion (September 23, 2020) stated: “Bitcoin assets should be declared with an inheritance and inheritance tax will be imposed upon the estate of a deceased person in respect of Bitcoin that were held by such person.” This characterizes Bitcoin as a commodity under Inheritance and Transfer Tax Law Article 3.1, though reaching such conclusions without specific statutory rules contradicts taxation legality principles.

The Central Bank Regulation and Unofficial Draft Legislation primarily define crypto assets as “intangible assets,” theoretically permitting heritage inclusion and succession subject to proper legal framework implementation.

The Antalya Regional Court of Justice (6th Civil Chamber, November 13, 2020) first defined “digital assets” as “assets solely available in digital form and stored electronically, such as videos, photos, emails, personal social media accounts.” The court ruled digital assets constitute deceased estates as digital inheritance, subject to succession. Qualifying crypto assets as “digital assets” potentially permits crypto asset succession and inheritance.