Turkey is reportedly drafting new regulations to govern crypto assets to convince the Financial Action Task Force (FATF), a global body responsible for combating financial crimes, to remove it from the “grey list” of countries that have not done enough to combat terrorist financing and money laundering.
During a discussion with a parliamentary commission on October 31, Turkish Finance Minister Mehmet Simsek said a recent FATF evaluation found that Turkey complies with 39 of its 40 regulatory standards. Notably, the only area of concern is crypto assets. He cited plans to introduce a crypto-assets law to the Turkish parliament to get off the gray list. However, he did not elaborate on the legal changes.
Turkey has been on the FATF’s ‘grey list’ since 2021 due to issues related to terrorist financing and money laundering. Being on this list has impacted the country’s reputation and its economic future.
The FATF said that due to its geographical location, the country faces the highest risk of money laundering from drug trafficking, oil smuggling, human trafficking, and human trafficking. Moreover, the country encounters significant “terrorist financing risks from national and international threats.”
Meanwhile, Turkish authorities are continuously working to comply with FATF regulations. This move comes at a critical time when Turkey is facing economic changes, including annual inflation that reached 61.53% in September.
Country’s Focus On Crypto Regulations
The G7, a group of advanced economies, created the FATF to protect the global financial system. In 2019, the organization warned Turkey about substantial shortcomings in freezing assets related to terrorism and the spread of weapons of mass destruction.
The Turkish Presidential Annual Program for 2024 was published in October in the Official Gazette of the Republic of Turkey. It outlines the goal of finalizing cryptocurrency regulations within the country by the end of 2024.
The comprehensive 500-page document, including Article 400.5, describes the initiatives to establish precise definitions for digital assets, potentially subjecting them to taxation in the future. The document also aims to define crypto asset providers like crypto exchanges legally. However, it does not provide any detail of the future regulatory framework.
A senior strategist at BlueBay Asset Management, Timothy Ash, stated:
“In the eyes of the international community, crypto-assets are increasingly viewed as a litmus test for a country’s financial security protocols. Turkey recognizes this and is acting decisively.”