*This Article was originally published in Legal Industry Reviews
Edition 7 N'1 | November 2024 | Türkiye
Law No. 6362 on Capital Markets ("Law") introduced comprehensive regulations regarding crypto assets. The regulatory framework is not limited to the Law alone, as many key aspects are addressed through secondary legislation, set to be enacted gradually by February 2, 2025. Therefore, it is essential to closely follow the regulatory developments from institutions such as the Capital Markets Board (“CMB”), the Central Bank, the Banking Regulatory and Supervision Agency, and Scientific and Technological Research Council of Turkey (“TUBITAK”). Below, we summarize some of the key aspects of the existing regulations:
A. New Definition for Crypto Assets
The definition of crypto assets in the Law differs from the one previously provided by the Central Bank in the Regulation on the Non-Use of Crypto Assets in Payments. According to the Law, crypto asset is defined as the intangible assets that can be electronically created and stored using distributed ledger technology or a similar technology, distributed over digital networks, and can represent value or rights. A critical element of this new definition is its alignment with the European Union’s Markets in Crypto-Assets Regulation (“MiCA”). MiCA classifies crypto assets into three main categories: “asset-referenced tokens,” “e-money tokens,” and “crypto-assets other than asset-referenced tokens or e-money tokens.” In this connection, a similar categorization may be adopted within Turkish legislation, reflecting MiCA's regulatory approach.
B. Establishment and Operational Requirements
The Law grants authority to the CMB to regulate the establishment, operations, shareholders, and management of Crypto Asset Service Providers (“CASP”). It allows the CMB to define the principles and guidelines for CASPs’ operations, their obligations, information systems, technological infrastructure, and share transfers. These principles are further outlined in CMB’s Resolution No. 42/1259 dated August 8, 2024.
C. Dematerialization of Crypto Assets
One of the key compliance obligations for CASPs is the dematerialization of crypto assets. The Law indicates that the legal effects attached to the records maintained by the Central Registration Agency, Turkiye’s Central Securities Depository, for other capital market instruments will also apply to crypto assets via CASPs’ records. Therefore, it is crucial for CASPs to understand the regulatory framework governing the dematerialization of assets, which is outlined in the Communiqué on the Principles and Procedures for Keeping Records of Dematerialized Capital Market Instruments.
D. User Agreements
The Law grants the CMB authority to regulate the content of user agreements between CASPs and their customers. The Law specifies that any contractual terms that limit or eliminate the liability of CASPs towards their customers will be invalid. Given the critical role of user agreements, it is recommended to thoroughly review these agreements for regulatory compliance. Notably, since the Financial Crimes Investigation Board (“MASAK”) treats these agreements as trust and service agreements, breaches of these agreements may not only lead to contractual liability but may also be subject to criminal law scrutiny for breach of trust.
E. Conclusion
In conclusion, both the Law and the secondary regulations are establishing a strict regulatory framework for the operation of CASPs and trading in crypto assets and provides for transition periods and mechanisms for the crypto market’s regulation to be completed. Various oversight mechanisms have been put in place, requiring CASPs to carefully monitor regulatory developments and ensure compliance with the evolving legal framework. Compliance with these requirements will be critical for CASPs to sustain their operations and avoid potential legal liabilities.
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