Cryptocurrencies have taken a central role in the global economy due to their impact on the digital transformation of the financial system. With the amendments to Law No. 7518 on Capital Markets and the additional regulations coming into effect in November 2024, Turkey has introduced a comprehensive legal framework for the sector. These regulations hold strategic importance for companies operating in both domestic and international markets.

Purpose and Importance of Cryptocurrency Regulations

The 2024 regulations in Turkey aim to address several key objectives:

• Protecting Investor Rights: Safeguarding user rights and enhancing transparency in markets.

• Ensuring Financial System Stability: Establishing a secure framework for combating money laundering (AML) and terrorist financing (CFT) in cryptocurrency transactions.

• Strengthening International Competitiveness: Enhancing Turkey’s global competitiveness by aligning with international standards in this rapidly growing sector.

Regulatory Framework: Roles of the Capital Markets Board (SPK) and MASAK

Cryptocurrency service providers operating in Turkey must comply with regulations set by the Capital Markets Board (SPK) and the Financial Crimes Investigation Board (MASAK):

• SPK Regulations: These include detailed criteria for licensing, financial structure, and IT infrastructure. They also emphasize the segregation of client assets and security of custody services.

• MASAK Obligations: AML and CFT requirements include customer identification (KYC), reporting suspicious transactions, and managing high-risk clients.

The November 2024 amendments expand these obligations, mandating the segregation of client funds into fully separate accounts, stricter transaction monitoring, and enhanced transparency in reporting. These updates aim to align Turkey’s financial ecosystem with international standards.

Key Obligations for Cryptocurrency Service Providers

To operate in Turkey, cryptocurrency service providers must meet the following core requirements:

1. Licensing and Registration: A license from the SPK is the first step for providers before commencing operations. The application involves a detailed assessment of financial strength, IT systems, and other criteria.

2. Minimum Capital Requirement: Companies must be established as joint stock companies with a minimum capital of 50 million TL, fully paid in cash, and maintain equity above this threshold.

3. Protection of Client Funds: Client assets must be segregated from the provider’s corporate assets and securely stored. SPK regulations mandate specific security standards for managing hot and cold wallets. As of November 2024, these funds must be held in segregated accounts and subjected to tighter monitoring.

4. AML and CFT Compliance: MASAK regulations require the implementation of KYC, reporting suspicious activities, and creating risk profiles for clients.

5. Advertising and Marketing Restrictions: SPK regulations prohibit misleading or exaggerated advertising practices. Companies must ensure accurate and transparent communication with investors.

Technological Infrastructure and Data Security

The technological infrastructure of cryptocurrency service providers is critical for safeguarding client assets. Key requirements include:

• Information Systems Security: Providers must implement robust encryption methods and security protocols to prevent data breaches.

• Cybersecurity Measures: Infrastructure must be regularly updated and subjected to rigorous testing to counter cyber threats.

Challenges and Strategic Advantages in Compliance

The anonymous and rapid nature of cryptocurrency transactions can present challenges during compliance. However, companies that successfully manage this process gain significant advantages:

• Market Trust: Compliance builds investor confidence, strengthening competitive positioning.

• Mitigation of Legal Risks: Adhering to compliance obligations minimizes the risk of severe penalties.

• Global Alignment: Complying with Turkey’s regulations provides a strong foundation for companies seeking to operate in international markets.

The 2024 regulations serve as a roadmap for companies in the rapidly evolving cryptocurrency sector to achieve long-term success. Compliance with Turkey’s regulatory framework is not only a legal obligation but also a sustainable growth strategy for businesses aiming to thrive in this dynamic industry.