Turkey Formulates Cryptocurrency Regulations

The Middle East country, situated right in a strategic junction of Europe and Asia – Turkey, has finally formulated a draft bill for cryptocurrency regulations and other crypto assets. The draft bill will be presented in front of the Grand National Assembly of Turkey (GNAT).

Crypto assets have faced numerous hindrances in Turkey in an expanse of a few months, in 2021. The sinking economy was a significant cause for the increasing number of cryptocurrency investors and traders in Turkey. However, the new bill will make it difficult and expensive to trade or hold crypto assets within the geopolitical boundaries of Turkey. 

What Will The Cryptocurrency Regulations Bill Bring About Changes in Turkey?

The bill has been formulated assessing the country’s Western counterparts, the USA and Europe. Turkey’s Deputy Minister, Ercan Gul states that the country needs similar or stricter laws and a legal framework to regulate cryptocurrency and other crypto assets. Speaking to the parliamentary Planning and Budget Committee, Gul said, “Those that ban [crypto assets] are generally countries with democracy problems. There are free mechanisms in Western Europe and America.”

Turkish Draft Law Regulating Cryptocurrencies Enters Parliament in October  – Regulation Bitcoin News
Turkish Draft Law Cryptocurrency regulation bill enters Parliament in October 2021, news.bitcoin.com

The draft bill aims to strengthen protections for retail investors, cut down on the dirty business influenced by the decentralized nature of crypto assets such as money laundering, and improve cryptocurrency regulations in Turkey, Deputy Minister, Gul declared these.

According to CoinTelegraph Turkey, the bill also designates the issuance and distribution of crypto assets, trading policies, and conditions of crypto custodial services, similar to the services currently provided by South Korea.

The bill also mentioned the proposal of “minimum capital requirement” which was announced by the government earlier in May 2021. It is now officially stated in the draft bill hereby. This is likely to make cryptocurrency-related activity expenses higher than usual. This act of law will adversely prevent crypto enthusiastic entrepreneurs from entering the business circuit. It is an official backbone to the stance taken earlier this year, in April 2021. The government in Turkey had banned all sorts of payments via cryptocurrency and other crypto assets. The central bank denied support to any cryptocurrency exchange and trading platform. This is a concern faced by several central banks of different countries, for example, the Reserve Bank of India (RBI) and the US Fed.

The bill will also introduce taxation for cryptocurrency holdings above a given amount.

The draft will be presented in front of the Ankara or Grand National Assembly of Turkey (GNAT), then after being passed by the assembly, it will be sent to the President for approval. If the procedure does not face any objection or challenge to amend, the draft will be passed as an effective Turkish law in the country.

In May, Turkish Finance and Treasury Minister Lütfi Elvan said that the cryptocurrency exchange platforms must lay down their numerical details in the public authority if the trade volume exceeds 10,000 Turkish Lira (that is, approximately $1,200). This is an obligation under the new Anti-Money Laundering (AML) and financial terrorism legal framework.

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The cryptocurrency is cracked down by regulators around the world, http://Amar Ujala

On April 30, Turkey’s central bank banned the use of cryptocurrencies as a payment method because they have a volatile nature and are deemed risky. This provision was taken to stabilize the use of the fiat currency, which is ‘Liar’ in Turkey.

According to Chainalysis, Turkey’s crypto crackdown is a real blow to the country, which boasts the highest cryptocurrency transaction volume in the Middle East. Turkey’s inflation rate persistently hovers in the double-digits, weakening consumer buying power; and the fiat currency lira has witnessed a shrunk of value in the past few 2 years. The recent cryptocurrency crackdown provisions resulted in the two most popular cryptocurrency exchange platforms stepping down from the industry and shutting down. 

This shut down of crypto businesses has led to a greater fall of the economy in Turkey. It is interesting how inflation caused Turkish citizens to seek financial refuge in cryptocurrency investment and trading. The government to regulate this highly volatile and anonymous crypto-asset resulted in a significant crackdown and resulted in a worse economic condition.

The provisions seem to prohibit the cryptocurrency system with its tight regulations, however leaving little space for the development of blockchain technology.