The Capital Markets Board (CMB) has announced a significant set of regulations in the cryptocurrency space. These regulations entered into force with the amendments made to the Capital Markets Law No. 7518 and were announced in line with the framework determined by the Temporary Article 11 added to the Capital Markets Law No. 6362. The new regulations cover a wide range from the operation of crypto asset platforms to the protection of customer rights.
Basic Regulations and Principles
According to the CMB’s announcement, the following principles were introduced in order to eliminate various application differences encountered in the activities of crypto asset platforms and to protect investors:
- Obligation to Keep Customer Cash in Banks: According to Article 35/C of the Law, platform customers’ cash must be kept in banks. It is also stated that customer cash must be kept separate from the platform’s own assets. Platforms must clearly define the accounts to be opened in the name of customers and manage these accounts by stating that they belong only to the relevant customers. In addition, platforms cannot receive or deliver customer cash in person; these transactions can only be carried out through authorized institutions.
- Receiving Customer Orders: Crypto asset platforms can only receive customer orders through their own websites, mobile applications or registered phones through authorized personnel. Receiving orders through social media platforms (Whatsapp, Telegram, etc.) is prohibited. Platforms must store all data related to received orders (electronic log records for orders received over the internet and voice recordings for orders received by phone) in a secure and unchangeable manner.
- Restrictions on Crypto-Asset Trading: The trading, initial sale, exchange and custody of crypto assets through structures similar to exchange offices may be considered as unauthorized crypto asset service provision in accordance with Articles 99/A and 109/A of the Law. Platforms operating within this scope must cease their activities by November 08, 2024.
- NFT and Gaming Assets Exception: Non-fungible and unique crypto assets (NFT) and assets used only in virtual games are excluded from the listing rules. Platforms that process these assets will not be subject to the obligations under the Law, but if these assets are processed, platforms will be required to notify the CMB.
- Transparency of Platforms and Investor Information Obligations: Platforms are obliged to act as disclosed to customers and must inform customers whether the assets traded are subject to the supervision and audit of the CMB. If platforms trade in assets that are not within the scope of the Law, they must clearly inform customers of this and confirm that this information is understood before customer orders are accepted.
- Liquidity Providers and P2P Marketplaces: Institutions that provide liquidity for the purchase and sale of crypto assets but do not provide external services to investors will not be considered as platform activities. In peer-to-peer (P2P) digital marketplaces, those who provide unauthorized crypto asset services must cease these activities by November 08, 2024, in accordance with Article 99/A of the Law.
- Jurisdiction and Responsibilities of Other Institutions: In the event that crypto assets are used in connection with other asset groups such as commodities or real estate, no changes have been made to the Law on activities falling within the jurisdiction of other relevant regulatory institutions. Therefore, crypto assets that do not comply with the regulations of the relevant institutions cannot be listed on the platforms.
- Prohibition on Advertisements and Announcements Towards Investors: Platforms must be objective in their publications, announcements, advertisements and announcements to investors and must not include misleading information. Investors’ lack of information must not be exploited and misleading commitments such as guaranteed returns or losses must not be made. In addition, platforms cannot organize promotional campaigns that may mislead investors; such campaigns must be terminated within 15 days.
- MKK Integration: Platforms are obliged to transfer data with the Central Registry Agency (MKK) and must ensure appropriate integration with the technical infrastructure to be determined by the MKK.
- Crypto-Asset Custody: Platforms must perform crypto-asset transactions for which they are responsible to customers by selling the amount of crypto-assets in the platform wallets. Platforms cannot dispose of customer crypto-assets in favor of third parties and cannot make crypto-asset loans or leveraged transactions. In addition, control of crypto-assets that customers do not store in their own wallets must be with the platforms by November 08, 2024 at the latest.
It is thought that this regulation may affect the referral campaigns of cryptocurrency exchanges.
*This is not investment advice.
