Turkey Unveils Final Stages of Crypto Regulations, as CBDC Pilots Enter Second Phase
In a recent interview with the Anadolu Agency on January 10, Turkish Minister of Treasury and Finance, Mehmet Şimşek, provided insight into the imminent crypto regulations set to define and shape the country’s cryptocurrency landscape.
The forthcoming regulatory framework is poised to encompass critical aspects, including legal definitions, licensing requirements for trading platforms, and alignment with global standards set by the Financial Action Task Force (FATF).
Şimşek disclosed that the regulatory framework for the Turkish crypto market is in its conclusive phase, with meticulous assessments underway to evaluate its technical implementation.
Highlighting the government’s steadfast commitment to mitigating risks associated with crypto trading, Şimşek expressed intentions to align domestic practices with international standards. He emphasized the significance of these steps in complying with FATF directives and facilitating Turkey’s exit from the “gray list.”
“Our aim is to mitigate risks inherent in crypto asset trading for all investors in line with global norms. This aligns with FATF guidelines as we strive to transition out of the gray area,” Şimşek explained.
The forthcoming guidelines are set to mandate licensing for crypto platforms, necessitating authorization from Turkey’s Capital Markets Board (CMB), according to Cointelegraph. Additionally, the regulatory framework aims to establish precise legal definitions for various crypto-related terminologies. These include terms such as “crypto assets,” “crypto wallets,” “crypto asset service providers,” “crypto asset custody service,” and “crypto asset buying and selling platforms.”
Şimşek illustrated the definition of crypto assets as “intangible assets electronically created and stored utilizing Distributed Ledger Technology (DLT) or similar digital networks, having the capability to represent value or rights.”
While shedding light on the impending regulations, Şimşek clarified that the framework would not encompass specific tax regimes for virtual assets.
Turkey’s CBDC Pilots Progress to Second Phase
On another note, the Central Bank of the Republic of Turkey (CBRT) marked the conclusion of the first phase of its central bank digital currency (CBDC) pilot with the release of a comprehensive report on New Year’s Eve.
This report signals the initiation of the second phase, slated for this year, which will dictate the fate of a potential digital lira launch.
In 2021, the CBRT disclosed its strategic technology partners for this ambitious endeavor, collaborating with defense corporation Aselsan, software tech firm Havelsan, and the government’s Information Security Research Center, Tubitak Bilgem.
Amidst the backdrop of Turkey’s prioritization of digitalization, especially among its youthful demographic, where nearly half of the population is under the age of 35, the CBDC initiative gains prominence.
The report outlines four primary motivations for the CBDC initiative, with financial inclusion standing as a cornerstone. Addressing the fact that approximately 40% of Turkey’s population remains unbanked, other motivations include establishing an alternative payment channel, ensuring the consistency of digital payments, and fostering innovation through programmable payments.
The upcoming second phase of testing holds extensive plans, focusing on interoperability with existing payment infrastructures, exploring programmable payments, offline payment capabilities, hardware wallet integration, and performance assessments.
Additionally, the CBRT aims to deliberate on both legal and economic aspects, exploring the possibility of the CBDC’s increasing interest.
While the report briefly touches on wholesale and cross-border payments, the CBDC exploration extends beyond the initial phase. Ongoing research delves into these areas, with plans for collaboration with international institutions for further cross-border CBDC exploration on the horizon.
Turkey stands on the edge of a transformative era in the realm of cryptocurrencies and digital currencies. With an eye on regulation and compliance, the nation steers its course toward fostering a regulated environment within the space.
As the CBRT advances its CBDC pilots into the second phase, the potential launch of a digital lira looms on the horizon.
These initiatives not only reflect the government’s commitment to digitalization and financial inclusion, but also signify a forward-thinking approach aimed at harnessing technological innovation for the benefit of the broader financial landscape.
