The bill containing regulations for crypto assets has been approved and enacted in the Turkish Grand National Assembly.

A new regulation regarding the cryptocurrency market has been approved in the General Assembly of the Parliament. The aim of the regulation is to eliminate the legal loopholes that cause grievances.

EXTENSIVE AUTHORITY TO CMB

The new law introduces capital requirements for service providers. This way, both investors will be protected and a series of sanctions will be imposed on service-providing companies. The law also regulates how relationships with cryptocurrency users will be established and how identity verification will be conducted.

According to the regulation, permission will be obtained from the Capital Markets Board for service provider organizations and activities. The CMB has also been granted authority for the issuance, sale, and distribution of cryptocurrencies. All transfer transactions will be recorded.

PRISON SENTENCE FOR UNAUTHORIZED CRYPTO SERVICE PROVIDERS

According to the law, individuals and legal entities found to be operating as unauthorized cryptocurrency service providers will be sentenced to imprisonment for a period of 3 to 5 years and fined between 5,000 and 10,000 days.

Members of the board of directors and other members of the cryptocurrency service provider who misappropriate money, documents, or assets, or convert them for their own benefit or for the benefit of others, will be sentenced to imprisonment for a period of 8 to 14 years and fined up to 5,000 days; they will also be required to compensate for the damages caused to the cryptocurrency service provider.

If the crime is committed through fraudulent acts aimed at preventing the misappropriation from being revealed, the perpetrator will be sentenced to imprisonment for a period of 14 to 20 years and fined up to 20,000 days. However, the amount of the fine cannot be less than three times the damage suffered by the cryptocurrency service provider and its customers.

Those who commit acts of using the resources of the cryptocurrency service provider, its customers, or the individuals who legally or effectively hold the management or control of the cryptocurrency service provider for their own or others' benefit, after the permission has been revoked, will be sentenced to imprisonment for a period of 12 to 22 years and fined up to 20,000 days.

DEFINITION OF WALLET AND CRYPTOCURRENCY IN THE LAW

In the law, "wallet" is defined as software, hardware, systems, or applications that enable the transfer of cryptocurrencies and the storage of private and public keys related to these assets, either online or offline. According to the law, "cryptocurrency" is defined as intangible assets that can be electronically created and stored using distributed ledger technology or similar technology, distributed through digital networks, and representing value or rights.

"Cryptocurrency service provider" includes platforms, organizations that provide cryptocurrency custody services, and other organizations designated to provide services related to cryptocurrencies, including the initial sale or distribution of cryptocurrencies, in the regulations to be made based on this law. "Cryptocurrency custody service" is defined as the storage, management, or other custody services of the private keys that enable the transfer of the cryptocurrency of platform customers or related to these assets, as determined by the Capital Markets Board (CMB).

"Platform" is defined as organizations where one or more of the following transactions are carried out: cryptocurrency trading, initial sale or distribution, exchange, transfer, storage required by these transactions, and other transactions that may be determined.

12 MILLION PEOPLE HAVE ACCOUNTS

There are 12 million people with balance accounts in the capital markets. Platforms that meet the conditions specified by the law will be authorized, and banks will also need to obtain custody licenses.

INCREASED REGULATIONS IN THE CRYPTOCURRENCY MARKET

The regulation also determines the penalties for market manipulation, disruptive actions, and insider trading. Administrative fines ranging from 246,000 to 6 million Turkish liras will be imposed for disruptive actions.

OBLIGATION FOR SERVICE PROVIDERS TO JOIN THE TURKISH CAPITAL MARKETS ASSOCIATION

Crowdfunding platforms and cryptocurrency service providers will be required to become members of the Turkish Capital Markets Association. This will ensure their representation within a professional organization and enable communication with the sector through a single point. It is also aimed to benefit from the self-regulatory function of the Turkish Capital Markets Association in ensuring the sector's own discipline.

ACCESS BLOCK TO UNAUTHORIZED ACTIVITIES

The law includes provisions regarding the measures to be taken in case unauthorized capital market activities are conducted through the internet. Accordingly, in cases where it is determined that unauthorized capital market activities are conducted through the internet due to the difficulties in determining the content or location provider of the publications subject to crime committed in the internet environment, the distinction between domestic and foreign is eliminated, as in the case of unauthorized capital market activities conducted through the internet. The measure of removing the content is also added to the measures to be taken.

When it is determined that unauthorized capital market activities are conducted through the internet, the Board will decide on the removal of the content or the blocking of access to the publications made through the internet and send it to the Access Providers Association for implementation.