Türkiye’s ruling party proposes to align the country’s encryption legislation with international standards

PANews reported on May 17 that according to Cointelegraph, Turkey’s ruling party submitted a draft encryption bill to the country’s parliament on May 16. The bill focuses on the licensing and registration of encryption service providers and aligning them with international standards. The draft bill aims to update existing laws to comprehensively regulate the emerging cryptocurrency market. The bill’s focus areas include consumer protection, platform transparency and compliance with financial regulations.

The draft law aims to regulate crypto-asset service providers, crypto-asset platform operations, crypto-asset storage, and crypto-asset purchase, sale, and transfer transactions that can be conducted by Turkish residents. The legislation also addresses the classification of cryptocurrencies and projects, ensuring compliance with existing financial regulations. Some key points of the bill: Crypto service providers must be licensed and regulated by the Capital Markets Commission (SPK); SPK’s supervision is strengthened to protect consumer assets and ensure effective dispute resolution; SPK and TÜBİTAK enforce enforcement on crypto service providers Sex income taxation; ban on foreign cryptocurrency brokers to promote locally regulated ecosystem.

The draft law proposes incorporating travel guidance issued by the Financial Action Task Force (FATF). The FATF Travel Rule requires financial institutions participating in virtual asset sales and cryptocurrency companies (collectively known as VASPs) to obtain and share "accurate originator information and beneficiary information" with counterparty VASPs or other financial institutions before or during a transaction. Turkey was included in the "grey list" by the FATF in October 2021 due to its inability to implement anti-money laundering measures in banking, real estate and other industries and making it vulnerable to money laundering. FATF requires countries on the gray list to actively cooperate in rectification and serious investigation and punishment of existing problems.