1. Introduce
In today's world, where cryptocurrencies and blockchain technology have emerged as the latest products of technological advancement, their impact has not been limited to the economy but has extended to the legal realm as well. Law, due to its nature, is a field that trails behind technology chronologically. A technological innovation must first emerge, be adopted to some extent by society, and then cause disagreements that require unique solutions. Only when these conditions cumulatively occur does the legal field take steps towards regulation and codifications.
Cryptocurrencies and crypto assets, introduced into our lives by Satoshi Nakamoto (founder of Bitcoin) in 2009, gained significant popularity following the COVID-19 pandemic in 2020, which confined people to their homes and created economic challenges. Due to people's collective interest and increased attention eventually caught the eye of the legal field and the academic world. In Türkiye, the initial codification efforts in crypto and blockchain began in the field of criminal law, aimed at ensuring public security by preventing terrorism and its financing. The latest product of this evolving codification effort is the Law No. 7518 on Amendments to the Capital Markets Law. It is proposed in 2023 and was published in the official gazette on July 2, 2024, and entered into force on the date of its publication
Referred to colloquially as the cryptocurrency law, the primary question that arises is which part/parts of the community this law will affect and how it will impact consumers, producers, or intermediary service providers. To find answers to these questions, it is essential to first examine the structure of the 7518 Amendments. A significant portion of the amendment under Law No. 7518 consists of definition provisions, while the remaining part mainly focuses on regulatory authority.
2. Legal Definitions
With this amendment, the legislator has defined certain terms related to the world of crypto assets but has excluded some topics that are not popular as much as cryptocurrencies. For example, there is no regulation concerning Non-Fungible Tokens (NFTs) in this law, indicating that the influence of NFTs has not been significant enough to catch the legislator's attention. The primary target of this law are the Capital Markets Board (CMB) and Crypto Asset Service Providers. Following the definitions, the law also establishes rules regarding the authority, boundaries, decisions, and organizational structure of the CMB, and grants certain authorizations. Subsequently, direct regulations concerning the operations and service principles of Crypto Asset Service Providers, in areas not left to the CMB, are made.
Regarding the definitions: The term "wallet" is defined without distinguishing between hot and cold wallets. However, as the law dives into more detail, it becomes evident that its approach to hot and cold wallets is not the same.
The definition of "crypto asset" contains two eye catching points: one is that the law leaves a future-oriented opening regarding the technology used to create crypto assets, and the other is the exclusion of NFTs from the scope of this amendment. Therefore, while this law covers those intermediating in the buying, selling, storing, and initial sale of cryptocurrencies, it does not cover any parts of NFT markets.
The remaining two definitions pertain to Crypto Asset Service Providers and Crypto Asset Custody Services. Crypto Asset Service Providers can be referred to as cryptocurrency exchanges in everyday language, while custody services refer to wallet applications.
In conclusion, under this law, entities mediating the storage, sale, exchange, transfer, and other related transactions of crypto assets, excluding NFTs, are subject to the authorization of the CMB.
3. What Happens Now?
The relevant law was published in the official gazette on July 2, 2024, and entered into force. From now on, service providers are obliged to carefully follow the CMB's guidelines. The legislature divides service providers into two groups: those already providing crypto asset services when the amendment entered into force, and those who wish to establish and start service later.
The second group, which has not yet started providing services, is prohibited from offering services until they obtain their permissions from the CMB, as stipulated in Provisional Article 11/3. Swiftly, those already providing services can continue by integrating with the CMB's regulations, while those who have not yet started must wait until they obtain the necessary permissions.
The first group must submit the Attachment-1 and Attachment-2 forms, available on the CMB's website, without any delay or any missing parts by August 2, 2024. Those who provide these documents completely and submit them must declare that they will make a liquidation decision within a maximum of three months and will publicly state they are not going to accept new customers during this process. Applications submitted to the Board will be announced on the Board's website. Additionally, entities undergoing liquidation must inform their customers via communication tools such as phone, text message, and email, in addition their website. The practice of recording income from platform revenues into the budgets of the Board and TÜBİTAK will begin with calculations based on 2024 figures in 2025. Those who do not comply with the provisions of this law may face administrative and criminal sanctions under Articles 99/A and 109/A of the Capital Markets Law.
It should also be noted that cryptocurrency ATMs and foreign-based crypto asset service providers must cease their operations within three months. If such providers are found operating after this period, will be subject to sanctions under the same provisions of the law
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.