Turkey is planning to get off the Financial Action Task Force's (FATF) "grey list."
What to expect in the crypto market?
In October 2021, the Financial Action Task Force (FATF) placed Turkey on the "grey list." This indicated that the country was under heightened monitoring due to concerns about money laundering and terrorism financing.
Two years later, in November 2023, the media learned about Turkey's plans to tighten cryptocurrency regulations. It is anticipated that this move will help the country persuade the FATF to remove it from the "grey list."
It's important to understand that Turkey is among the top five countries in terms of cryptocurrency trading volumes. According to the analytical firm Chainalysis, the country ranks fourth in cryptocurrency volumes, surpassing Russia.
Two years later, in November 2023, the media learned about Turkey's plans to tighten cryptocurrency regulations. It is anticipated that this move will help the country persuade the FATF to remove it from the "grey list."
It's important to understand that Turkey is among the top five countries in terms of cryptocurrency trading volumes. According to the analytical firm Chainalysis, the country ranks fourth in cryptocurrency volumes, surpassing Russia.
These high figures are fueled not only by the absence of strict market regulations but also by high inflation in the country (over 61% as of November 2023).
The population is hedging risks through virtual assets, as indicated by the fact that the trading pair with the Turkish lira has become the most popular on the Binance exchange.
The population is hedging risks through virtual assets, as indicated by the fact that the trading pair with the Turkish lira has become the most popular on the Binance exchange.
As of mid-October 2023, the lira accounted for over 80% of trades among fiat pairs on the cryptocurrency exchange, surpassing the euro and the pound sterling, according to data from the French analytical firm Kaiko.
Therefore, it is quite evident that Turkey is targeting this industry to address issues with the FATF.
As stated by Turkey's Minister of Finance, Mehmet Simsek, the country has only one issue left to resolve, which is cryptocurrencies. He added that legislators will soon introduce a cryptocurrency bill to parliament. However, the exact timing and specifics of the regulatory act are currently unclear.
Therefore, it is quite evident that Turkey is targeting this industry to address issues with the FATF.
As stated by Turkey's Minister of Finance, Mehmet Simsek, the country has only one issue left to resolve, which is cryptocurrencies. He added that legislators will soon introduce a cryptocurrency bill to parliament. However, the exact timing and specifics of the regulatory act are currently unclear.
What to Expect from Turkish Cryptocurrency Regulation
Work on the bill can be traced back to May 2022 when it was revealed that Turkey plans to impose taxes on "certain transactions" involving cryptocurrencies.
According to insiders, among the proposals was also a requirement to establish a capital of 100 million liras ($3.5 million as of November 2023) for cryptocurrency exchanges.
It was also claimed that international trading platforms might be obligated to open branches in Turkey for tax compliance. Despite the lack of a clear framework, it is anticipated that Turkish authorities will introduce a symbolic tax on cryptocurrency purchases.
The introduction of taxation requirements will inevitably lead to an increased demand for automated solutions. For businesses, manual calculations simply don't make sense, so there is a high likelihood of increased demand for tax providers knowledgeable in cryptocurrency matters. At BitOK, for example, we offer flexible tax calculation options for any scenario, with API integration with leading cryptocurrency exchanges.
Close associates of Turkish authorities assert that legislative changes will also affect the custodial (depository) sector. It is reported that authorities may require local crypto firms to use banking infrastructure to prevent fraud or cryptocurrency theft.
Banks are unlikely to deploy AML solutions for cryptocurrencies from scratch. Firstly, it is costly. Setting up a separate database with individual settings and markers is required for each blockchain network.
Secondly, banks risk getting into trouble if they cannot trace "black" addresses interacting with their infrastructure.
This means that the demand for compliance services in the region is likely to increase significantly, affecting the cost of AML service providers. However, it is premature to definitively speak about the regulation of the Turkish market, and it is better to wait for the publication of the bill itself.
According to insiders, among the proposals was also a requirement to establish a capital of 100 million liras ($3.5 million as of November 2023) for cryptocurrency exchanges.
It was also claimed that international trading platforms might be obligated to open branches in Turkey for tax compliance. Despite the lack of a clear framework, it is anticipated that Turkish authorities will introduce a symbolic tax on cryptocurrency purchases.
The introduction of taxation requirements will inevitably lead to an increased demand for automated solutions. For businesses, manual calculations simply don't make sense, so there is a high likelihood of increased demand for tax providers knowledgeable in cryptocurrency matters. At BitOK, for example, we offer flexible tax calculation options for any scenario, with API integration with leading cryptocurrency exchanges.
Close associates of Turkish authorities assert that legislative changes will also affect the custodial (depository) sector. It is reported that authorities may require local crypto firms to use banking infrastructure to prevent fraud or cryptocurrency theft.
Banks are unlikely to deploy AML solutions for cryptocurrencies from scratch. Firstly, it is costly. Setting up a separate database with individual settings and markers is required for each blockchain network.
Secondly, banks risk getting into trouble if they cannot trace "black" addresses interacting with their infrastructure.
This means that the demand for compliance services in the region is likely to increase significantly, affecting the cost of AML service providers. However, it is premature to definitively speak about the regulation of the Turkish market, and it is better to wait for the publication of the bill itself.
