President Tayyip Erdogan's ruling party in Turkey has introduced a new crypto bill aimed at combating illicit activities and money laundering in the digital asset space, with the overarching goal of elevating the country's status on the Financial Action Task Force (FATF) grey list.

The draft legislation put forth by the AK Party mandates licensing and registration for crypto asset service providers, stressing the necessity for platforms and related entities to obtain licenses from Turkey's Capital Markets Board. Encompassing various facets of crypto asset services, including trading platforms, storage, and transactions, the proposed law seeks to bolster regulatory oversight and adherence to compliance standards.

Turkey's descent to the FATF grey list in October 2021 due to perceived shortcomings in supervising sectors susceptible to money laundering prompted a concerted effort to address deficiencies and fortify the regulatory framework. The proposed crypto regulations delineate rigorous requirements for platform governance, services, and operational protocols to mitigate risks and bolster consumer protection.

Ankara's proactive stance in developing crypto asset legislation over the past two years underscores its commitment to regulating the sector and safeguarding investors. These new regulations are pivotal for rebuilding market trust, averting financial losses, and fostering a secure environment conducive to crypto trading and investment.

Empowering the Capital Markets Board to institute regulations and guidelines for crypto asset service providers, the draft law mandates compliance with the new standards and authorizes enforcement measures against non-compliant entities. Recent engagements between Turkish officials and an FATF delegation anticipate a forthcoming report, with hopes of a positive evaluation and potential upgrade from the FATF subsequent to the enactment of the proposed regulations.

Beyond addressing FATF concerns, the legislation seeks to fortify Turkey's financial infrastructure, attract investment, and stimulate growth within the crypto sector by establishing a regulated and secure environment. By delineating clear rules and standards, Turkey endeavors to underscore its commitment to combating financial crimes and bolstering its international financial standing, with the ultimate aspiration of exiting the FATF grey list and enhancing its reputation in the global financial arena.