The global approach to cryptocurrency regulation is undergoing significant restructuring, with bodies like the Financial Action Task Force (FATF) at the forefront. The United States has started steering towards more flexible crypto regulations, yet as global anti-money laundering norms were set in place quite some time ago, nations such as Turkey are now beginning their gradual shift towards adopting these standards.
Regulatory Shifts in Turkey
Historically, cryptocurrencies operated relatively freely, thriving in a world that largely lacked regulatory oversight. However, as their significance grows, integrating them into a coherent global asset framework becomes crucial. Countries are thus aligning with FATF’s directives, ensuring standardized regulatory approaches.
Turkey has responded by forming a draft law to prevent the illicit use of digital coins for money laundering, guided by the FATF’s stringent protocols. A failure to adhere might result in punitive measures, including sanctions. The primary administrator of these regulations in Turkey, the MASAK, functions under Law No. 5549 focusing on crime proceeds prevention.
What Will MASAK’s New Authority Entail?
MASAK, under the proposed legal changes, would obtain broader powers to freeze digital currencies’ accounts, parallel to traditional bank accounts. As Bloomberg indicates, Turkey also considers mandating clear documentation for bank transfers over 200,000 Turkish Lira, potentially extending these rules to crypto transactions by next year.
After a 2.5-month break, Turkey’s Grand National Assembly (TBMM) will reconvene to address pending legislations, including granting new powers to MASAK. The timetable for this legislative empowerment remains uncertain but is anticipated shortly.
Regarding taxation of cryptocurrencies, Turkey has not initiated new taxation laws. Past comments from the Revenue Administration (GİB) in 2021 centered on regulating exchanges rather than imposing taxes on individual traders, who remain untaxed on their digital asset profits.
“Exchanges are subject to tax on their earnings, but there is no current plan to tax individual cryptocurrency profits,” notes GİB.
The inherent complexity of calculating crypto taxes, amplified by market volatility, leaves full-fledged crypto taxation challenging worldwide. Given that Turkey does not tax traditional exchanges, it appears rational to apply the same logic to cryptocurrencies.
Tax regulations will not be retroactively applied, reassuring that traders will be informed ahead of time if such policies were to be revised. GİB emphasized that without specific legislation, there won’t be a retrospective enforcement of taxes on cryptocurrencies.