In a move outlined in the 2024 Turkish Presidential Annual Program, the country is set to establish comprehensive crypto framework and regulations by the end of the calendar year. The official document was released on Oct. 25 in the Official Gazette of the Republic of Turkey. It specifically highlights Article 400.5, which sheds light on the upcoming initiatives to define crypto assets.

The aim is not only to provide a legal framework for crypto asset providers, including crypto exchanges, but also to establish a basis for potential taxation.

Defining Crypto Assets for Taxation

The heart of the matter lies in the meticulous definition of crypto assets within the legal landscape. This strategic move is poised to pave the way for appropriate taxation methods in the foreseeable future. While the document unveils these intentions, it remains silent on the finer details of the impending regulations.

Lessons Learned from Thodex Incident

The urgency for robust regulations is underscored by the 2023 legal proceedings against Faruk Fatih Özer, the former CEO of Thodex, a prominent Turkish crypto exchange. Özer faced a staggering 11,196 years in prison, a consequence of the abrupt collapse of Thodex in 2021.

Frontpage of the crypto framework document

As one of the country’s major trading platforms, the incident served as a wake-up call. It further prompted authorities to expedite the crafting of a comprehensive crypto framework.

Turkey’s Crypto Landscape: A Historical Perspective

Notably, a 2022 study revealed that Turkey ranked second globally in terms of crypto-related search requests. This was with 5.5% of the population actively making such queries. This surge in interest is attributed to an elevenfold increase in crypto usage during 2021, fueled by the persistent inflation crisis affecting the Turkish lira.

Central Bank’s Endeavor with Digital Lira

Taking a step further in the digital realm, the Central Bank of the Republic of Turkey conducted the first trial of its central bank digital currency, the digital lira, in December 2022. The successful trial further marked a significant milestone, with plans outlined for continued testing throughout 2024.

While a complete shift to digital currency remains uncertain, Turkish President Recep Tayyip Erdoğan has consistently expressed support for the digital lira project.

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