Turkey made itself a name as a crypto-friendly country with a "wait and see" approach to digital assets, but that could be about to change, as the government is now ready to take things in hand.
The Turkish Ministry of Treasury and Finance went to Twitter to express concerns about cryptocurrencies and to announce collaborative work on the topic with several local regulators on Monday.
According to the announcement, the ministry is working with the central bank alongside two financial regulatory agencies:
"We share the rising concerns about crypto with the rest of the world. The developments (on crypto around the world) and the state of crypto in Turkey are closely monitored by our ministry. We are collaborating with the Central Bank, Banking Regulation and Supervision Agency, and Capital Markets Board within this frame under the presidency of Deputy Minister."
Cointelegraph Turkey reached out to local blockchain and crypto experts for comment. Blockchain 101 co-author and Blockchain Turkey Platform's chief editor Ahmet Usta noted that the fast-growing cryptocurrency and digital asset ecosystems can be risky for investors who are uninitiated in the complicated dynamics of crypto.
"I think it would be appropriate to approach the statement by The Ministry of Treasury and Finance within this context, and I hope future regulations will pave the way for innovation while protecting consumers," he said. "I hope Turkey will seize this historical opportunity in the field of cryptocurrencies and blockchain technology, which made these assets possible and reach a leading position with its exemplary projects in the global arena by creating a healthy ecosystem."
Crypto lecturer İsmail Hakkı Polat told Cointelegraph that the primary goal of the ministry's announcement is to protect consumer rights, stating, "I believe the first step would be licensing local crypto exchanges to prevent any activities that could potentially harm investors. This can be done by using capital markets as a template."
The second step, according to Polat, could be taxes for crypto trading, perhaps as soon as the third quarter of 2021:
"If the government takes a friendly approach here by placing lower tax rates, making it easier to buy and sell Bitcoin or other cryptocurrencies within a legal framework, Turkey would then become an attractive market for the global crypto investors again. In a time where the foreign capital flow is a serious need, global crypto investors' potential interest in Turkey would bring economic relief to the country."
Polat also suggested that any potential tax regulation should follow the approach of international institutions such as the Financial Action Task Force and have clear definitions of what constitutes a cryptocurrency.
"Lack of definition and regulations for cryptocurrencies would cause confusion of authority among regulatory bodies. Taxes would surely come, but only after a systematic and careful study," Polat said.
In an earlier interview, Binance CEO Changpeng Zhao told Cointelegraph that the exchange worked closely with local regulators when entering Turkey. “Working with governments is key to building a sustainable industry and promoting greater adoption. We are always working with local regulators in our development efforts,” he explained.
Özgür Güneri, CEO of major Turkish crypto exchange BtcTurk, expressed open support for regulations in a press release. "A regulatory framework for the cryptocurrency market would add value to İstanbul Finance Centre strategy and position Turkey as a leader in this industry. We appreciate and support the efforts within this context."
More support for the announcement came from Bitpanda Turkey general manager Elbruz Yılmaz, who said that his exchange has know-how on the regulatory framework of European markets and is ready to participate in local studies on the topic.
According to an earlier report from Cointelegraph, the Capital Markets Board of Turkey — the regulatory body overseeing securities markets in the country — had plans to develop guidelines to oversee, audit and regulate crypto markets.
Additional reporting by Cointelegraph Turkey’s Ayşe Karaman and Emre Günen.