Existing Crypto Exchanges’ Status Clarified

Recent Developments

The Law No. 7518 Amending the Capital Markets Law (“Crypto Law“) entered into force upon its publication in the Official Gazette dated July 2, 2024 and numbered 32590. On the same date, the Capital Markets Board of Türkiye (“CMB“) published an announcement (“Announcement“) on its website, which sets out the application procedures and documents for the crypto asset service providers (“Service Providers“) that either wish to continue their operations, or commence operations for the first time.

You can access the application documents published by the CMB here. Additionally, please refer to our previous alert on the Crypto Law here.

Application Procedures and Documents

According to the Announcement, as of July 2, 2024, the following is applicable:

— Those already operating as Service Providers and intend to continue to do so, must submit their declarations in writing to the CMB together with the information, documents and explanations in the application form (“Annex-2“) and the application documents (“Annex-1“) by August 2, 2024.

— Those already operating as Service Providers, but that will take a liquidation decision, must submit to the CMB, in writing, their declaration that they will take a liquidation decision until October 2, 2024 and that they will not accept new clients during the liquidation process, together with Annex-2 and their explanations on how they will carry out the liquidation process, by August 2, 2024. Without prejudice to the relevant provisions of the Turkish Commercial Code No. 6102, these Service Providers must announce this situation on their websites and notify their customers via email, text message, telephone and similar communication tools. The responsibility for the proper communication of the notifications to the customers belongs to the Service Providers.

— Those wishing to commence operations before the secondary regulations to be issued by the CMB enter into force are required to submit their declarations in writing to the CMB together with Annex-1 and Annex-2 before commencing their operations.

— The Service Providers resident abroad must terminate their activities for and with Turkish resident clients until October 2024 at the latest.

— The activities of ATMs and similar devices that allow clients to convert crypto assets into cash or cash into crypto assets, and to transfer crypto assets, are required to be terminated by October 2, 2024, at the latest.

In each case listed above, acting otherwise will lead to unauthorized crypto asset service providing activities, which results in imprisonment for three to five years, and a judicial fine of up to TRY 1 million.

Applications to be Announced on the CMB’s Website

The applications made to the CMB will be announced in two separate lists under the “Institutions/Crypto Asset Service Providers” tab on the CMB’s website as “List of Operating Institutions” and “List of Liquidation Declarants,” and the updated lists will be accessible on the CMB’s website.

Scope of the Crypto Law According to the Announcement

Additionally, the CMB went beyond the general flow of the Announcement and identified the activities that fall within the scope of the Crypto Law. According to the Announcement, any medium in which one or more of the activities of trading, exchange, transfer, and custody of crypto assets, as well as the storage and management of crypto assets or private keys that provide the right to make transfers from crypto asset wallets are carried out as a regular occupation, commercial or professional activity, falls within the scope of the Crypto Law.

Conclusion

The Announcement will provide guidance for applications to be made under the Crypto Law. Further, the fact that the CMB included explanations in the Announcement determining the scope of the Crypto Law may signal that it will act quickly in making secondary regulations.