Turkey's Evolving Crypto Regulations and Market Growth

Turkey's Evolving Crypto Regulations and Market Growth

Turkey's cryptocurrency landscape is changing with new laws and growing bank adoption, despite payment restrictions and tax uncertainties.

Key Takeaways

Legal Status: Individuals in Turkey can legally buy, hold, and trade cryptocurrencies, but using them for payments remains prohibited since 2021.
Regulatory Developments: In 2024, new regulations have been introduced to better regulate the cryptocurrency sector and safeguard investors.
Tax Environment: Although Turkey does not currently tax crypto profits, a modest 0.03% transaction tax is being contemplated to support fiscal reform.
Bank Adoption: The integration of crypto services by Turkish banks and the growing presence of crypto ATMs illustrate an increasing acceptance of digital assets in everyday transactions.

In recent years, Turkey has emerged as a significant player in the cryptocurrency realm, spurred by high inflation rates and a lack of trust in the national currency, the Turkish lira. With the lira losing close to 60% of its value and inflation soaring to 85.5% from 2021 to 2023, many have turned to cryptocurrencies like Bitcoin as both a store of value and a means of exchange. This article examines the evolving landscape of crypto regulations in Turkey, aiming to create a safer and more transparent environment for investors and exchanges.

Is Turkey Crypto-Friendly?

Turkey is showing a proactive stance towards cryptocurrencies, with efforts to develop a comprehensive legal framework for digital assets. The recent legislation introduced in 2024, which includes regulatory bills and licensing requirements, underscores this commitment to formalizing the crypto sector. This regulatory rigor also aims to improve Turkey's standing with the Financial Action Task Force (FATF), moving the country off its "gray list" that identifies nations with insufficient Anti-Money Laundering (AML) practices. Being on this list subjects Turkey to closer scrutiny regarding its measures against money laundering and terrorism financing.

So, can individuals legally buy cryptocurrencies in Turkey? Absolutely. It's perfectly legal to purchase, hold, and trade digital currencies, though using them for everyday purchases remains prohibited—a ban that has been in place since 2021.

Did you know? According to Chainalysis, Turkey ranks as the fourth-largest crypto market globally, with a trading volume of around $170 billion, surpassing significant markets like Russia and Canada.

Should You Pay Crypto Taxes in Turkey?

As of October 2024, Turkey has not established specific regulations for taxing individual investors' profits from cryptocurrency holdings. While plans to tax crypto profits have been dismissed, a nominal transaction tax of 0.03% is under consideration as part of broader fiscal reforms to address a budget deficit exacerbated by earthquakes in 2023. This small tax could potentially generate yearly revenues of approximately 3.7 billion Turkish lira for the government.

Are There Crypto-Friendly Banks in Turkey?

The banking sector in Turkey is gradually embracing cryptocurrencies, even amidst ongoing legal uncertainties. Institutions such as Misyon Bank have opted for Taurus to provide Bitcoin custody and tokenization services. Meanwhile, Garanti BBVA has launched a crypto wallet and trading platform, allowing customers to manage their Bitcoin holdings through a mobile application.

Furthermore, Akbank has acquired a local crypto firm, Stablex, and several banks including QNB Finansbank, İşbank, and Ziraat Bank offer avenues to purchase Bitcoin, often through exchanges linked to these banks.

Which Crypto Exchanges Operate in Turkey?

As of late 2024, multiple crypto exchanges facilitate the buying, storing, and trading of cryptocurrencies in Turkey. However, navigating these platforms requires an understanding of the regulatory landscape.

In July 2024, Turkey implemented the "Law on Amendments to the Capital Markets Law," delineating a regulatory framework for crypto exchanges. This legislation mandates that crypto service providers adhere to licensing standards, which bolster investor protection and enhance market clarity. Platforms are also required to remit an annual fee amounting to 2% of their trading income.

Since the law's implementation, over 80 cryptocurrency firms, including major names like Binance, Bybit, and OKX, have applied for licenses with the Turkish Capital Markets Board (CMB).

Capital Markets Board's "List of Those in Action”

The CMB's initial findings indicated that three companies have declared liquidation, while others remain under review for lacking complete or adequate documentation. Though these companies appear on the “List of Those in Action,” it’s crucial to note that they have not yet received complete authorization and await the introduction of secondary legislation.

The 2021 AML law mandates that crypto exchanges adhere to stringent regulations aimed at combating money laundering and terrorism financing. This legislation affects all entities involved in facilitating crypto transactions in Turkey, imposing comprehensive Know Your Customer (KYC) requirements. As a result, investors must provide personal identification details, enforcing a more secure trading environment.

Did you know? Government oversight of crypto exchanges might compromise the privacy and autonomy associated with cryptocurrency transactions, subsequently impacting the freedoms and market behaviors that digital currencies are intended to uphold.

How to Buy Bitcoin (BTC) in Turkey on a Crypto Exchange

Acquiring Bitcoin in Turkey can be straightforward through various local crypto exchanges or brokers, each differing in terms of complexity, security precautions, and fees.

Does Turkey Have Bitcoin ATMs?

Bitcoin ATMs have been operational in Turkey since 2013, with the first installation at Istanbul Atatürk Airport. Cities like Istanbul, Ankara, Izmir, and Adana now host several Bitcoin ATMs.

ATM at Akinturk Opet Bornova in İzmir

Most Bitcoin ATMs allow users to deposit cash and buy Bitcoin instantly using Turkish lira, though not all machines provide this option.

Did you know? In 2021, the Central Bank of Turkey launched the Central Bank Digital Currency (CBDC) initiative, aimed at creating a digital Turkish lira, with initial test transactions taking place in 2022, though the timeline for future phases remains unspecified.

Can You Buy Crypto with Cash in Turkey?

It is possible to exchange cash for Bitcoin at physical locations like Coinsfera in various cities, typically without needing a bank card or ID. There are also local shops and cafes that facilitate unofficial cryptocurrency exchanges in places like Istanbul's Kapalı Çarşı Bazaar. However, caution is advisable, and the legitimacy of these exchange points should be verified prior to use, as local prices might be higher due to operational costs.