Turkey is among the top-performing nations in the world economically, witnessing a recent shift in its financial environment due to its citizens’ acceptance of cryptocurrencies. There were no particular regulations limiting the usage of cryptocurrencies at first; therefore, they functioned in a legal murky area. But as their popularity grew, it became apparent that a precise regulatory framework was required. 

The Turkish authorities issued cautions about the risks of cryptocurrencies in 2017, which was a major first step. Notwithstanding this caution, the use of cryptocurrency is growing in popularity as it is embraced by a variety of demographics. As a result of government authorities observing this, regulations changed in 2021. This adjustment affects cryptocurrency users as well as crypto exchanges in Turkey in an enormous manner.

Implementation of Regulations Affecting Crypto Exchanges in Turkey

In April 2021, regulations were published by the Republic of Turkey’s Central Bank (CBRT). This law serves as the foundation for the regulatory challenges faced by both crypto users and exchanges in Turkey. The law outlaws the usage of cryptocurrencies and crypto assets as means of payment. This agency’s goal is to put controls in place to mitigate the risks connected with the rapid spread of digital currency. This has a big impact on Turkish payment service providers because some of their policies forbid using cryptocurrencies.

The first is a ban on payment service providers offering their services to platforms that help with cryptocurrency asset issuance, trading, custody, or transfers. They were also prohibited from creating business plans that include using cryptocurrency assets for payment services, either directly or indirectly. The two restrictions have a big impact on users as well as crypto exchanges in Turkey. 

Because there was no complete legal framework in place prior to the regulations of 2021, exchanges were forced to negotiate a challenging and constantly changing regulatory landscape. Even now, the rule solely deals with making payments using crypto. This presents crypto exchanges in Turkey with certain legal challenges. The Turkish government has been attempting to establish a more regulated and safer environment for the crypto exchanges in Turkey as well as their users in response to these worries. 

Although the specifics of the planned licensing requirements are still being worked out, it is anticipated that exchanges will have to adhere to strict standards concerning client protection, security, and anti-money laundering (AML) procedures.

This implies that exchanges have to confirm users’ identities and keep an eye out for any unusual conduct in transactions. Although these precautions increase security, they also pose difficulties for exchanges, especially with regard to operating and compliance expenses.

Taxation Policy Developments Impacting Crypto Exchanges in Turkey

Another important component of the legal system pertaining to crypto exchanges in Turkey is taxation. The government is eager to make sure that the right taxes are applied to crypto transactions. The Turkish Revenue Administration has been striving to create cryptocurrency-specific tax regulations that should simplify and increase transparency in the taxation process.

Conclusion

Looking to the future, the Capital Markets Board (CMB) has taken a leading role in establishing Turkey’s regulatory environment for cryptocurrency exchanges. The CMB has stepped up efforts in recent years to control cryptocurrency exchanges and safeguard investors. Turkish crypto investors can expect a more streamlined and transparent cryptocurrency policy that prioritizes safety.