The Bill on Amendments to the Capital Markets Law, introduced to the Parliament’s Presidency with the endorsement of AK Party deputies, marks the initial legal framework concerning cryptocurrencies.
Formulated after thorough analysis of global precedents, this bill encompasses regulations on cryptocurrencies, addressing provisions concerning crypto assets, service providers, and measures aimed at customer protection.
Delve into 10 pivotal questions and their corresponding answers elucidating the proposed legislation on crypto assets:
1- Where Will the Legal Framework for Crypto Assets Be Established?
The regulatory framework for cryptocurrencies will be embedded within the Capital Markets Law, with the proposal introducing explicit definitions concerning crypto assets into this legislation.
Scheduled for discussion in the Planning and Budget Commission on Thursday, May 30, the bill will subsequently undergo deliberation in the General Assembly of the Turkish Grand National Assembly. Upon approval in the General Assembly, the proposal will be enacted into law and published in the Official Gazette, thus becoming enforceable.
2- Where Will the Legal Framework for Crypto Assets Be Established?
In order to establish and commence operations, crypto asset service providers will be required to obtain authorization from the Capital Markets Board (CMB). Moreover, adherence to criteria outlined by TUBITAK regarding information systems and technological infrastructures will be essential for approval by the CMB.
The Capital Markets Board will also delineate the procedures and principles governing investment consultancy and portfolio management pertaining to crypto assets.
3- How Will Prices Be Determined?
Prices will be determined autonomously on platforms, with these platforms setting order and transaction protocols. They will establish robust surveillance systems and undertake preventive measures to ensure transactions are conducted in a reliable, transparent, effective, stable, fair, honest, and competitive manner. Furthermore, they will be vigilant in detecting, preventing, and mitigating market-distorting actions and transactions.
4- What Principles Will Guide Record-Keeping for Wallets and Funds?
Crypto asset service providers will maintain secure, accessible, and traceable records of customers’ cryptocurrency transfers and fund transfers in wallets and accounts. They will uphold the integrity, accuracy, and confidentiality of all transaction records. Compliance with regulations set by the CMB and the Financial Crimes Investigation Board will be imperative for customers’ crypto asset transfer transactions.
5- What Will Be the Regulations Regarding Customers’ Crypto Assets and Cash?
Platforms will be required to maintain customers’ crypto assets in their own wallets. Custody services for crypto assets that customers opt not to keep in their own wallets must be provided by banks authorized in accordance with regulations set by the Board and approved by the Banking Regulation and Supervision Agency (BDDK), or by institutions authorized by the Board to offer crypto asset storage services. Customers’ cash will be held in banks.
6- Who Will Be Responsible for Failure to Fulfill Obligations?
Crypto asset service providers will bear responsibility for damages resulting from their unlawful activities or failure to meet cash payment or crypto asset delivery obligations. They will be liable under the relevant provisions of the Turkish Code of Obligations for crypto asset losses arising from events such as information system operations, cyber attacks, information security breaches, or actions of personnel.
7- Can Crypto Assets Be Seized?
Customers’ cash and crypto assets, even if for public receivables due to debts of crypto asset service providers, cannot be seized, pledged, included in bankruptcy estates, or subject to injunctions. Similarly, the assets of crypto asset service providers cannot be seized, even if for public receivables due to debts of customers.
Injunctions, seizures, and all similar administrative and judicial requests concerning customers’ cash and crypto assets will be addressed by crypto asset service providers. If customers’ cash and crypto assets are seized by judicial authorities, the authorities will establish necessary procedures to store seized assets in wallets maintained by institutions authorized by the Board to provide custody services.
8- What Penalties Will Be Imposed for Unauthorized Crypto Asset Service Provider Activity?
Individuals and officials of legal entities engaging in crypto asset service provider activities without authorization will face imprisonment ranging from 3 to 5 years, along with a judicial fine ranging from 5 thousand days to 10 thousand days.
The board of directors and members of crypto asset service providers who embezzle cash or cash-substitute documents, other assets, or cryptocurrencies entrusted to them or for which they are responsible for protection, custody, and supervision due to their role as crypto asset service providers, either for themselves or for others, will be punished with imprisonment ranging from 8 to 14 years and a judicial fine of up to 5,000 days; they will also be liable to compensate for the damages incurred by the crypto asset service provider.
If the crime is committed with fraudulent behavior to ensure that the embezzlement is not revealed, the perpetrator will be sentenced to imprisonment from 14 to 20 years and a judicial fine of up to 20 thousand days. However, the amount of the judicial fine cannot be less than 3 times the damage suffered by the crypto asset service provider and its customers.
9- Taxation Absent, Service Fees Enforced: Insights into Crypto Asset Platforms”
“Upon the regulation’s implementation, crypto asset platforms will not face taxation, yet will be subject to an annual service fee. One percent of platform revenues, excluding the previous year’s interest income, will be allocated to the Capital Markets Board (CMB) and one percent to the TUBITAK budget, recorded as income by the end of May each year.
10- Crypto Asset Service Providers: Compliance and Transactions in Light of New Legislation
Individuals conducting crypto asset service provider activities on the date the law comes into force must, within one month from the effective date, submit the necessary applications to obtain operating permits by applying to the Board with the documents determined by the Board and meeting the conditions envisaged in secondary regulations, or they must declare within three months that they will liquidate without causing harm to customer rights and interests, and they will not accept new customers during the liquidation process.
Those who want to start their activities after the law comes into force will apply to the Board before starting their activities and declare that they will make the necessary applications to obtain an operating permit by meeting the conditions stipulated in the secondary regulations.
Failure to fulfill the transfer requests of customers who have accounts in organizations that choose to go into liquidation or who do not apply to the Board within the specified period will constitute the crime of unauthorized service provider activity.
Crypto asset service providers based abroad will terminate their activities for people residing in Turkiye within three months following the date of entry into force of the law.
The activities of ATMs and similar electronic transaction devices located in Turkiye, which enable customers to convert crypto assets into cash or cash into crypto assets and to transfer crypto assets, will be terminated within three months following the date of entry into force of the law; ATMs that do not cease their operations will be closed by the authorized administrations determined in the legislation regarding business opening and operating licenses, upon the notification of the highest local administrative authority.
Source: Trthaber / Prepared by Irem Yildiz