Turkey's new crypto bill, introduced by President Tayyip Erdogan's ruling party, aims to combat illicit digital asset activities and money laundering, with the goal of elevating the country's status on the Financial Action Task Force (FATF) grey list.

The draft law presented by the AK Party requires licensing and registration for crypto asset service providers, emphasizing the need for platforms and related entities to obtain licenses from Turkey's Capital Markets Board. The legislation covers various aspects of crypto asset services, including trading platforms, storage, and transactions, with the aim of enhancing regulatory oversight and compliance.

Following Turkey's downgrade to the FATF grey list in October 2021 due to inadequate supervision in sectors vulnerable to money laundering, the country is working to address deficiencies and strengthen its regulatory framework. The proposed crypto regulations outline stringent requirements for platform management, services, and operational standards to mitigate risks and enhance consumer protection.

Ankara has been actively developing crypto asset legislation for over two years to regulate the sector and safeguard investors. The new regulations are crucial for rebuilding trust in the market, preventing financial losses, and fostering a secure environment for crypto trading and investment.

The draft law empowers the Capital Markets Board to establish regulations and guidelines for crypto asset service providers, ensuring compliance with the new standards and taking enforcement actions against non-compliant entities. Turkish officials recently met with an FATF team in anticipation of an upcoming report, with hopes of a positive evaluation and a potential upgrade from the FATF following the implementation of the proposed regulations.

In addition to addressing FATF concerns, the legislation aims to strengthen Turkey's financial infrastructure, attract investment, and promote growth in the crypto sector by creating a regulated and secure environment. By setting clear rules and standards, Turkey aims to demonstrate its commitment to combating financial crimes and enhancing its international financial standing, ultimately seeking to exit the FATF grey list and enhance its reputation in the global financial community.