Recently, there have been increasing efforts to regulate crypto assets around the world. The most significant example of this is the Markets in Crypto-Assets (MiCA) regulation that has come into force in the European Union. Türkiye also participated in the legalisation of crypto assets and enacted Law No. 7518 on the Amendment of the Capital Market Law, published in the Official Gazette on 2 July 2024, number 32590, and added new regulations on crypto assets to the Capital Market Law No. 6362 ("Law"). 

This article discusses how crypto-asset service providers can operate in Türkiye, in five main sections as follows:  the conditions required for platforms to obtain an establishment permit, the sanctions regulated by the law, the requirements to be included in the contract to be concluded between the customer and the platform, and the transition process.

1. How Do Crypto Asset Service Providers Operate in Türkiye?

Crypto asset service providers are required to obtain a licence from the Capital Markets Board ("Board") in order to be established and commence operations in Türkiye. In addition, they are required to take the necessary measures, make the necessary arrangements and establish internal control systems in order to manage their systems securely.

The first paragraph of Article 35/B of the Law stipulates the obligations that service providers must fulfil in technical matters. Accordingly, crypto asset service providers must prepare their information systems and technological infrastructures in accordance with the criteria determined by TÜBİTAK. 

In addition, the partners and managers of service providers are required to fulfil certain conditions. When these conditions are analysed, it is seen that the criteria regarding the financial background of the partners and managers must be met. These criteria include not being a bankrupt or having declared concordat, not being in control of certain financial institutions, not having a finalised conviction for certain offences under the Turkish Penal Code, not being banned from transactions pursuant to the Law, having an open and transparent shareholding structure, criteria prioritizing financial background of these people aim to establish the reputation and stability of service providers. This issue is also important in terms of ensuring the trust of customers. 

2. What Are The Conditions For Settıig Up Platforms?

The conditions for the establishment of the Platforms are set out in Resolution No. 42/1259 of the Board of Directors dated 08.08.2024 ("Resolution"). Accordingly 

• Platforms shall be established asjoint stock company,
• All shares must be registered shares,
• Shares may be issued for cash.
• The minimum capital of TRY 50,000,000 shall be fully paid up in cash and the shareholders' equity shall not be less than this amount.
• The articles of association of the platforms must comply with the relevant laws and regulations.
• The founders must meet the conditions specified in the law and relevant regulations, 
• Include the phrase "crypto asset trading platform" in their trade names to indicate the services they will provide, 
• Its Articles of Association must stipulate that its activities are limited to the trading, initial sale or distribution, clearing, settlement, transfer and execution of one or more of the custodial transactions required for such transactions in crypto assets,
• The board of directors shall consist of at least three members,
• The ownership structure should be transparent and open. 

3. What Are The Sanctions For Service Providers?

In the event that crypto asset service providers engage in unlawful transactions and activities, the Board may, in accordance with the general provisions of Articles 96 et seq. of the Law, require the relevant service provider to remedy the violations within the specified period, restrict the activities, temporarily suspend or revoke the authorisations, bring criminal and civil actions or impose administrative fines. In this respect, it should be noted that the measures and sanctions to be imposed on cryptoasset service providers are largely based on the general provisions of the Law.

In addition, Article 109/A of the Law provides that persons who engage in unauthorised activities as crypto asset service providers may be sentenced to 3 to 5 years' imprisonment and of 5,000 to 10,000 days judicial fine.  

As one of the important issues in terms of establishing customer trust, in the case of embezzlement in crypto-asset service providers, the chairman and members of the board of directors and other members of the crypto-asset service provider may be sentenced to 8 to 14 years' imprisonment and a judicial fine of up to 5,000 days, and these persons shall be obliged to compensate for the damage to the crypto-asset service provider. As a major offence, it is stipulated that if the offence is committed with fraudulent behaviour to ensure that the embezzlement is not revealed, the perpetrator shall be sentenced to 14 to 20 years' imprisonment and a judicial fine of up to 20,000 days. If the embezzlement is committed by officials of a service provider whose operating licence has been revoked, the perpetrators will be sentenced to imprisonment for a term ranging from 12 to 22 years and a judicial fine of up to 20,000 days. In addition, the perpetrators will be held personally liable for compensation to customers, primarily from the amount they have misappropriated. 

4. What Will Be the Relationship Between the Service Provider And the Customer?

The relationship between the crypto-asset service provider and the customer may be established by a written contract or at a distance using remote communication means or communication means determined by the Board to be in writing, using methods that allow verification of the customer's identity. Accordingly, crypto-asset service providers are obliged to identify the identity of their customers within the scope of the Law on the Prevention of Laundering of the Proceeds of Crime of 11/10/2006, number 5549, and the relevant legal provisions. 

In addition, the minimum provisions to be included in the contract may be determined by the Board and, pursuant to the first paragraph of Article 35/C of the Law, it is determined that any contractual provisions that exclude or limit the liability of crypto asset service providers towards their customers shall be null and void. 

5. What Steps Should Service Provıders Take During The Transition?

Pursuant to Provisional Article 11 of the Law, crypto-asset service providers were required to make a declaration to the Board by 2 August 2024  that they would apply for an operating licence or start liquidation process. Accordingly, the Board published the list of entities that have made such a declaration in its announcement of 05.08.2024.

According to the decision, service providers that have declared or will declare that they will operate in accordance with this list must apply to the Board for an operating licence by the close of business on 8 November 2024, providing the information and documents specified in the decision. The organisations included in the list of those operating during this period may continue their activities until the Board's regulations on the conditions of operation come into force.