The global landscape for cryptocurrency regulations is in the midst of rapid evolution, with significant roles being played by organizations such as the Financial Action Task Force (FATF). In this context, the United States has taken important steps toward adopting more lenient approaches to cryptocurrency regulations. However, in a world where standards for anti-money laundering were established some time ago, countries like Turkey are now beginning to enact these regulations.
Turkey’s Cryptocurrency Legislation
Cryptocurrencies have long existed in a regulatory gray area globally, offering them the flexibility to operate with relative freedom. However, as the cryptocurrency sector ascends to a status of global asset class, the necessity for some regulatory frameworks becomes inevitable. Each country is striving to align with the global standards set by the FATF as part of this transition.
To comply with FATF standards and prevent the misuse of cryptocurrencies for money laundering, Turkey is preparing a draft law. The Financial Action Task Force sets and monitors global standards against money laundering and terrorist financing. Countries that fail to comply with these standards risk being placed on a sanctions list.
In Turkey, the institution operating under Law No. 5549 on the Prevention of Laundering Proceeds of Crime is MASAK. With proposed legislation, Turkey aims to grant MASAK the authority to freeze cryptocurrency accounts under FATF regulations.
According to Bloomberg sources, the proposed changes will expand MASAK’s Anti-Money Laundering (AML) authority to include the ability to freeze both cryptocurrency and bank accounts. Turkey was already preparing to introduce mandatory explanations for bank transfers exceeding 200,000 Turkish Lira, with similar requirements anticipated to encompass cryptocurrency transactions next year.
When Will the Legislation Be Enacted?
The Turkish Grand National Assembly (TBMM) has been on recess for the past 2.5 months and will resume its activities on October 1 at 3:00 PM local time. With numerous pending legislations, including those related to the economy, tax regulations, education reform, and foreign policy, MASAK’s empowerment through the TBMM is expected to take place soon.
What about cryptocurrency taxation? Currently, there’s no ongoing tax initiative for cryptocurrencies. In late 2021, when cryptocurrencies saw a rise, some statements were made by the Revenue Administration (GİB), but the focus was on regulating exchanges. Exchanges are already paying taxes on their earnings, and there are no immediate plans to impose taxes on individual cryptocurrency gains.
The complexity of tax calculations, coupled with the volatility in profits and losses, makes global cryptocurrency taxation challenging. Given that traditional stock exchanges in Turkey are not taxed, viewing cryptocurrencies in the same category seems reasonable.
The GİB made it clear in their 2021 statements that no taxation would occur before tax legislation is established, and such legislations cannot be retrospectively enforced.