Recent Developments Regarding Crypto Assets in Turkish Law
There is recently a significant development on the attempts to regulate the cyrpto assets under Turkish legislation. The first regulation with respect to crypto assets was made on 16 April 2021 with the Regulation on Prohibition of Use of Crypto Assets in Payments (“Regulation”) adopted by the Central Bank of the Republic of Turkey, which entered into force on 30 April 2021.
The significance of the Regulation was that it defined “crypto assets” for the first time in Turkish law as “intangible assets that are created virtually using distributed ledger technology or similar technology and distributed over digital networks, however not qualified as nominal money, registered money, electronic money, payment instrument, security or other capital market instrument”. In addition, use of crypto assets in payments were prohibited by the Regulation. More specifically, the Regulation banned the following activities regarding crypto assets:
Crypto assets shall not be used directly or indirectly in payment;
Services regarding direct or indirect use of crypto assets in payments shall not be provided;
Payment service providers shall not develop business models enabling direct or indirect use of crypto assets in provision of payment services and issuance of electronic money and shall not provide any services regarding such business models; and
Payment institutions and electronic money institutions shall not intermediate to platforms that offer trading, custody, transfer or issuance services in relation to crypto assets or fund transfers to be made from such platforms.
Accordingly, the use of crypto assets as a means of payment was prohibited. However, the Regulation did not introduce any bans on transactions such as trading and issuance of crypto assets or to crypto assets platforms. Although payment and electronic money institutions were prevented from intermediating such activities, the Regulation allowed banks, which are not included within the scope of payment and electronic money institutions, to intermediate and perform these transactions. Therefore, it is still possible for individuals to transact in crypto asset platforms through banks. In contrast, the use and development of business models in provision of payment services via crypto assets have been restrained for all payment service providers, including banks.
Another regulation followed on 1 May 2021 with the amendments made to the Regulation on Measures for the Prevention of Laundering of Crime Proceeds and Financing of Terrorism (“AML Measures Regulation”), where crypto asset service providers were included within the scope of obligors, which includes their branches, agencies, representatives, commercial representatives and similar affiliated units, who shall, inter alia, identify their customers, take required measures and report suspicious transactions, provide information and documents, as well as keep documents and submit them when necessary and continuously inform the Financial Crimes Investigation Board (“MASAK”). However, no definitions were provided in relation to the said crypto asset service providers in the AML Measures Regulation.
Further to this development, on 4 May 2021, MASAK also published a guide in which it expands on the obligations of crypto asset service providers under the AML Measures Regulation. In this guide, MASAK also states that crypto asset service providers are those who intermediate trading of crypto assets over electronic transaction platforms.
In parallel with the worldwide trends in regulating crypto assets, we should expect to see more development and novelties for regulating these assets under Turkish law in the near future.