Turkey Prepares Stricter Crypto Regulations to Combat Financial Crime

• The regulations will require virtual asset service providers to collect and share sender or recipient identity details for non-compliant transfers
• 48-hour delay will be applied to most crypto withdrawals
• Platforms must have a 20+ character transaction description, in addition to the origin and purpose of each transfer

Turkey’s Ministry of Treasury and Finance, led by Finance Minister Mehmet Şimşek, is implementing stricter measures to curb crypto-enabled money laundering. This especially relates to platforms that are linked to illegal betting and fraud.

The regulations will align with international standards and will require virtual asset service providers (VASPs) to collect and share sender or recipient identity details for non-compliant transfers.

Additional details say that a 48-hour delay is present and will be applied to most crypto withdrawals. That increases to a 72-hour delay for first-time withdrawals from any account, which is somewhat of a cooling-off period to deter illegal fund movements.

There are also limits on stablecoin transfers, with a daily cap of $3,000 and a monthly cap of $50,000. Interestingly, providers that fully comply with the rules may get double these limits.

Regarding the transaction itself, the new regulations stipulate that platforms must have a 20+ character transaction description, in addition to the origin and purpose of each transfer.

Any non-compliance will result in administrative, legal, and financial penalties, including possible license revocation.

It’s worth noting that transfers associated with providing liquidity, market-making, and arbitrage will be excluded from these restrictions, provided they are under platform monitoring.

Turkey’s regulatory overhaul

Lately, the country has been setting its eyes on crypto regulations and adding a bunch of new rules. For instance, in March, Turkey passed new crypto laws under its Capital Markets Board (CMB). This introduced stricter licensing, custody safeguards, and compliance requirements, basically mirroring Europe’s MiCA framework.

A month earlier, a rule that VASPs must verify users for transactions above 15,000 TL (approximately $425) has started.

Turkey ranks among the top global crypto adopters, driven by inflation and lira devaluation, yet payments using crypto remain banned by the central bank. Still, according to Statista, the number of people who heard and are familiar with cryptocurrencies and Bitcoin skyrocketed. It went from 16% in 2020 to 70% in 2021, and in the following years, almost every survey participant was knowledgeable about crypto.

All things considered, the withdrawal delays and stablecoin limits could deter short-term speculative trading, but Turkey is looking to strike a balance that still allows legitimate activity. Will the country succeed in that, is yet to be seen.