Cryptocurrency Regulations in Turkey: Key Updates and Trends

Uncover the latest information on crypto regulation in Turkey in 2024, particularly taxation, trade legalization, and the emergence of banks willing to offer services related to digital currencies.

Despite prohibiting crypto from being used for payments, Turkey is fast becoming a major participant in the global cryptocurrency market. The European nation is establishing itself as a crypto-friendly country with new legislation reforms in 2024, guaranteeing investor protection and officially regulating the sector.

This guide gives insight into the recent developments in Turkey’s crypto regulatory framework, the extent of crypto penetration, and the possibility of eliminating the restrictions on cryptocurrency trading in Turkey.

Recent Developments in Turkey’s Cryptocurrency Regulations

Turkey has developed regulatory instruments to provide safe and healthy trading conditions for those who trade cryptocurrencies. With these regulations, the government can protect its citizens and control the activities of exchanges.

The regulatory framework developed by Turkey for crypto exchanges has met expectations. Previously, Turkey was put on the “gray list” by the Financial Action Task Force for not having punitive measures against terrorist and money laundering activities.

However, new policies, especially the AML, make implementing KYC procedures for crypto exchange services mandatory. Thus, investors have to go through a verification process when they are creating accounts with exchanges, which encourages better tracking of the movement of funds.

Is Crypto Legal in Turkey? 

The answer is ‘yes”, as one can legally purchase, possess, and trade cryptocurrency in Turkey. However, since January 2021, payment with crypto has been prohibited.

Under this limitation, people cannot use Bitcoin or other cryptocurrencies to pay for any product or service purchase. This strategy is in line with the government’s desire to control the leak in its finance mechanisms while still allowing people to use modern-day virtual currency.

Nevertheless, Turkish residents have adopted crypto measures owing to the rising interest rate of fiat currency and inflation. Notably, the country experienced severe economic challenges between 2021 and 2023, which resulted in a drop in the value of the Turkish Lira.

Cryptocurrency Taxation in Turkey

Currently, Turkey does not impose taxes on individuals who make profits from selling or buying digital currencies. However, it plans to introduce a new fee of 0.03% for cryptocurrency transactions.

This fee is not only custom but is also part of the attempts to curtail the financial deficits it experienced following the 2023 earthquake. Though an exact date for the commencement of this particular tax has not yet been given, the projected annual income could be up to 3.7 billion Turkish Lira.

Currently, the absence of a capital gains tax on profits from cryptocurrency trading makes Turkey one of the most favorable places for crypto investments. However, the transaction tax, when introduced, would affect the volume of trade, especially for high-frequency traders.

Crypto Adoption and the Banking Sector

With the rising adoption of crypto in Turkey, the nation’s financial industry has also emerged from the shadows. Some banks have started offering cryptocurrency services.

For instance, Turkish bank Garanti BBVA launched a crypto wallet and a cryptocurrency trading platform for its customers to buy and sell Bitcoin within its app. Other banks, such as Akbank and Misyon Bank, have also started offering services through partnerships with crypto companies.

With Banks now offering crypto services, residents can readily engage in this market, boosting crypto adoption further.

Crypto Exchanges Operating in Turkey 

Since introducing laws for Turkish crypto exchanges in July 2024, over 80 companies have sought the approval of the Capital Markets Board (CMB). Exchanges such as Binance, Bybit, and OKX have taken steps to adapt to Turkey’s new rules.

These regulations are particularly important for the protection of investors and for ensuring that exchanges operate within acceptable standards of safety and transparency. Moreover, the CMB also performs oversight functions on other financial markets.

Accordingly, the Commission recently published a “List of Those in Action” containing the names of companies that it is going through their approval application. Meanwhile, the authorities have advised investors to conduct trade solely on licensed exchanges since they operate within Turkey’s regulatory purview.

Conclusion

Driven by legislative clarity, strong public demand, and rising integration with the banking industry, Turkey’s Bitcoin market is set for further expansion. Although the prohibition on using cryptocurrencies for payments is still in place, the capacity to exchange and retain digital assets provides Turkish residents with a reasonable substitute for the Lira.