The Regulation on Nonuse of Crypto Currencies in Payments by Central Bank of the Republic of Turkey (“CBRT“) was published in the Official Gazette dated 16 April 2021 and numbered 31456 (the “Regulation”). The Regulation will enter into force as of 30 April 2021.
By the Regulation, crucial steps have been taken regarding crypto currencies, having been frequently mentioned recently, and
the use of crypto currencies in payments either directly or indirectly has been banned, blocking their use outside crypto currency exchanges.
What Does the Regulation Bring?
An interesting progress has been the introduction of a definition for “crypto assets”. The definition provides that crypto currencies are “intangible assets created virtually using either distributed ledger technology or a similar technology and distributed across digital networks which shall not in any manner be qualified as fiat money, cash, digital cash, instrument, security or other capital market instruments”.
In this regard,
the law-maker has also blocked the way to qualify crypto currencies as securities or capital market instruments or payment instruments.
The main provisions introduced by the Regulation are as follows;
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Crypto assets/currencies shall not be used in payments,
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Crypto assets/currencies shall not be used either directly or indirectly within the scope of providing payment services or supply of digital cash,
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No intermediation activities shall be performed to the platforms (crypto currency exchanges) offering trading, custody, transfer or supply services for crypto assets or fund transfers from these platforms,
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Business models shall not be developed in a way enabling crypto assets/currencies to be used directly or indirectly within the scope of payment services and digital cash supply and no services related to such business models shall be provided.
Who Does the Regulation Affect?
Within the scope of the Regulation,
payment institutions such as PayU and Ödeal and
digital cash institutions such as Papara and Iyzico are included, while
crypto currency exchanges are excluded from the scope.
In terms of banks, “as they are payment service providers” developing a business model enabling crypto assets/currencies to be used directly or indirectly, and providing services related to such business models are banned.
The provisions of the Regulation regarding not to mediate fund transfers to or from crypto asset exchanges, is only for payment and digital cash institutions. In other words, banks (as they are not payment institutions but payment service providers) are excluded from this scope.
Sanctions Forseen Under the Regulation
Under the Regulation, applicable sanctions in case of infringements were not regulated. Nonetheless, additional regulations in the upcoming days are expected to be implemented within the framework of the current scope, application principles and possible tax liabilities regarding crypto currencies.
The Regulation does not have a readily available English version. However, the Turkish version of the Crypto Assets Regulation may be accessed from here.
Bilge Binay Kanat, Senior Associate
Burak Batı, Associate