NEW REGULATIONS ON CRYPTO ASSET SERVICE PROVIDERS
The long-awaited secondary regulations on crypto assets in Turkey have been published in the Official Gazette dated March 13, 2025. The “Communiqué on the Establishment and Operational Principles of Crypto Asset Service Providers (III-35/B.1)” and the “Communiqué on the Working Principles and Capital Adequacy of Crypto Asset Service Providers (III-35/B.2)” ("Communiqués"), prepared by the Capital Markets Board ("Board"), introduce new rules and standards for the sector.
The new regulations include detailed provisions on various key issues such as the establishment and operational licenses of crypto asset platforms, capital adequacy requirements, audit obligations, and sanctions for breaches of obligations.
Firstly, Crypto Asset Service Providers ("Service Providers") must obtain an establishment license before commencing operations. To be granted this license by the Board, they must (i) be established as a joint-stock company, (ii) have all their shares as registered shares, (iii) issue shares exclusively for cash, (iv) maintain a minimum capital amount determined by the Board, which must not be lower than the capital adequacy requirements set for Service Providers, (v) have fully paid-in capital, and (vi) ensure their equity capital is not below the prescribed minimum capital amount. According to the new regulations, crypto exchanges operating in Turkey must have a minimum capital of TRY 150 million, while crypto asset custody institutions must have TRY 500 million in capital. Additionally, at least 25% of their equity capital must be secured in the form of paid-in or issued capital by June each year.
After obtaining an establishment license, companies must apply to the Board for an operational license within six months. If they fail to do so, they will lose their right to obtain an operational license.
Foreign-based crypto exchanges intending to operate in Turkey will now be prohibited from offering services to Turkish investors without obtaining an official license. This aims to prevent unlicensed and unregulated services and protect investors from unregulated platforms.
To enhance investor protection, crypto asset platforms are now required to store customer funds in bank accounts. They can no longer hold client funds directly within their structures. Instead, these assets must be kept in accounts opened at banks and monitored separately from platform accounts. Furthermore, platforms must sign custody agreements with crypto asset custody service providers, and at least 95% of customer assets must be held in licensed custody institutions. Additionally, platforms must maintain a 3% liquid reserve for customer assets not held in custody, to strengthen financial stability.
The regulations prohibit leveraged trading and restrict certain businesses and transactions. Leveraged trading, margin trading, lending and short-selling transactions are prohibited on crypto asset platforms. In addition, a regular supervision and audit process has been established. Annual independent audits and proof-of-reserves audits have been made mandatory. Platforms will also be required to provide customers with a risk disclosure form explaining the risks of crypto assets before signing a framework agreement. Furthermore, platforms must develop a recovery plan to address unexpected financial crises. Exchanges will be required to establish a Listing Committee consisting of at least three members, responsible for preparing reports on assets to be listed and delisted. This measure aims to ensure a more reliable and transparent process in the selection of assets available on the platforms.
As part of the new regulations, the use of specific terms in trade names has been clearly defined. Platforms must include the phrase "crypto asset trading platform" in their trade names, while entities providing custody services for crypto assets must use the term "crypto asset custody institution." Additionally, the use of trade names and trademarks will be subject to the approval of the Board.
Moreover, the outsourcing processes of platforms have been regulated within a specific framework. In this context, platforms' outsourcing of information systems, technical infrastructure, and customer security services is subject to certain rules.
The regulations also introduce new requirements for investment advisory services. Platforms will only be allowed to provide investment advisory services to clients whose total crypto asset holdings with the platform have a current market value of at least 50 million TRY. Platforms may apply to the Board to voluntarily suspend their operations for a maximum period of two years. If a platform does not resume operations at the end of this period, all its operating licenses will be revoked.
Platforms that wish to permanently cease operations can apply to the Board to renounce their licenses. However, they must grant their customers time to withdraw their assets, notify creditors via public announcements, and fulfill all their obligations. The Board may restrict, temporarily suspend, or completely revoke an operating license if a platform; fails to operate within one year of obtaining its license, has obtained the license through misleading statements, engages in activities that violate regulations, or experiences financial deterioration.
The regulations also cover technical requirements, such as cybersecurity insurance, the establishment of a price monitoring system, conflict-of-interest management, a reconciliation system, and integration with the Central Registry Agency (“CRA”).
Additionally, if a violation of equity capital adequacy, liquidity obligations, or customer asset custody requirements is detected, platforms will be given 30 business days to rectify the breach. In such cases, they may submit a letter of guarantee in a format and content determined by the Board within four business days. This letter of guarantee will be blocked in the relevant bank until the obligation is fulfilled, but the blocking period cannot exceed three months. However, if corrective actions have been initiated, the Board may extend this period by another three months. Furthermore, if custody limits are violated more than twice within one month, the custody institution must report this to the Board. Platforms must correct any debt amount exceeding the limit within 30 business days. Otherwise, they will be required to provide collateral to rectify the situation or face operational restrictions. Platforms engaging in illegal activities will be subject to severe sanctions.
A transition period has been introduced for existing crypto asset platforms. Platforms currently operating must apply for an operating license, meet capital adequacy requirements, and fulfill other obligations by June 30, 2025. These regulations aim to align Turkey's crypto ecosystem with international standards, enhance investor protection, and foster a more institutionalized sector.