The Bill on the Amendment of the Capital Markets Law, also known as the crypto bill, which includes regulations on crypto assets, was passed by the Turkish Grand National Assembly and became law.

First of all, the law does not contain tax-related provisions. While the tax issue is kept outside the scope of this law, it is estimated that it will be clarified in the coming period.

Defining the concepts of crypto assets and requiring permission from the CMB

The law defines concepts related to crypto assets. These include “wallet”, “crypto asset”, “crypto asset service provider”, “crypto asset custody service”, “platform” and “TÜBİTAK”. In order for crypto asset service providers to be established and start their operations, they must obtain permission from the CMB.

In addition, the obligations of crypto asset service providers to establish the necessary internal control units and systems in order to manage their systems securely are regulated. Compliance with the criteria to be determined by TÜBİTAK is adopted as a condition of activity.

The law lists the conditions to be sought in the partners and managers of crypto asset service providers. In addition, it is regulated that transactions such as trading, initial sale and distribution, as well as clearing, transfer and custody services to be carried out on the platforms will be carried out in accordance with the procedures and principles to be regulated by the CMB.

Opinion provision from TUBITAK in determining the standards for assets to be traded

On the other hand, it is also stipulated to obtain the opinion of TÜBİTAK on the determination of technical standards regarding the crypto assets to be traded on the platforms. Relations between platforms and customers are also regulated, and the storage of crypto assets belonging to customers on these platforms is also regulated. According to the law, customers will be able to keep these assets in their own wallets and, if they wish, they can subject them to transactions on crypto asset trading platforms.

The law also stipulates that crypto assets of customers cannot be seized, pledged, included in the bankruptcy estate, or subject to precautionary measures due to the debts of crypto asset service providers.

The CMB will determine the principles and guidelines for investment advisory and portfolio management

According to the law, principles and guidelines on investment advisory and portfolio management regarding crypto assets will also be determined in secondary regulations. The authority in this regard is also given to the CMB.

The principles regarding the advertisements and announcements of crypto asset service providers will also be established by the CMB. With the authorization of crypto asset service providers by the CMB, the CMB will also issue authorization certificates to these institutions.

The law adds crypto asset service providers to the list of organizations that must be members of the Turkish Capital Markets Association.

It is stipulated that the CMB will decide on the removal of content and/or blocking access to publications made via the internet, and that the decision will be sent to the Association of Access Providers for implementation.

Platforms based abroad…

The Law also regulates the measures to be applied in the event that investment advisory and/or portfolio management for crypto assets is carried out in violation of the principles to be determined by the CMB, and activities are carried out by platforms residing abroad for residents in Turkey. Accordingly, the activities of non-resident platforms for residents in Turkey or the provision of a prohibited activity related to crypto assets to residents in Turkey within the scope of the regulations to be made by the CMB are considered as unauthorized crypto asset service provision. In the event of any of the following situations: opening a workplace in Turkey, creating a website in Turkish, engaging in promotional and marketing activities directly or through persons or institutions residing in Turkey regarding the crypto asset services offered by platforms residing abroad, the activity will be deemed to be directed to persons residing in Turkey.

Measures against market disruptive actions

The liability provision introduced for investment institutions under the Capital Markets Law is also introduced for crypto asset service providers. In addition, the law includes market disruptive actions within the scope of cases where measures will be imposed. Accordingly, measures may be imposed on misdemeanor acts and transactions that may disrupt the operation of stock exchanges and other organized markets in trust, openness and stability, as well as activities to be carried out via the internet and social media.

Up to five years in prison for unauthorized activity

The law prevents unauthorized crypto asset service provider activity. The penalty for unauthorized activity will be imprisonment from three to five years.

Embezzlement provisions have also been introduced for the chairman and members of the board of directors and other members of the crypto asset service provider. Thus, it is aimed to prevent irregular transactions for customer assets.

Under the law, crypto asset service providers that are currently operating are required to apply to the board within one month. Crypto asset service providers that will not apply are requested to take a liquidation decision within three months.

The law, which also introduces provisions regarding cryptocurrency ATMs, prohibits these ATMs.