Recent Developments
The Capital Markets Board (the “Board“) clarified the conditions for the establishment of platforms that will operate in the crypto-asset industry with its resolution No. i-SPK.35.B (dated 8 August 2024, No. 42/1259) (the “Resolution“) published in the Board bulletin dated 8 August 2024, No. 2024/38. You access the Board bulletin here.
Prior to the Resolution, Law No. 7518 Amending the Capital Markets Law entered into force upon its publication in the Official Gazette dated 2 July 2024, No. 32590, and, on the same date, the Board published an announcement (the “Announcement“) on its website, which sets out the application procedures and documents for the crypto-asset service providers that either wish to continue their operations or commence operations for the first time.
The Resolution also determines the fate of declaration applications made by platforms under the Announcement, which do not contain certain documents and information required by the Announcement.
Additionally, please refer to our previous alert on the Announcement here.
Conditions for Establishment
Pursuant to the Resolution, several conditions must be met for the Board to authorize the establishment of platforms. Accordingly, a platform must meet the following conditions:
- It must be incorporated as a joint-stock company (anonim şirket).
- Its shares must be in registered form.
- Its shares must be issued against cash.
- Its minimum share capital of TRY 50 million must be fully paid in cash and its shareholders' equity must not be less than this amount (this amount may be increased within the scope of the regulations to be issued by the Board regarding the operating principles).
- Its articles of association must comply with the provisions of the Capital Markets Law No. 6362 (the “Law“) and related regulations.
- Its founders must meet the conditions specified in the Law and the relevant regulations.
- It must include the phrase “crypto-asset trading platform” in its trade name.
- Its articles of association must stipulate that its field of activity is exclusively limited to one or more of crypto-asset trading, initial sale or distribution, clearing, settlement, transfer and custody services required by these activities (in this framework, platforms will not be able to operate in a field other than the crypto-asset industry).
- Its board of directors must consist of at least three members.
- Its shareholding structure must be transparent and clear.
Establishment Applications
Platform founders are required to apply to the Board with the articles of association that will be prepared in accordance with the conditions for establishment, documents evidencing that they and the directors meet the conditions required by the Law and the Resolution, the documents and forms in Annex 1 and Annex 2 of the Announcement and other documents that may be requested by the Board.
Pursuant to the Resolution, platforms that have received approval for establishment will also be required to apply to the Board separately to obtain an operating approval within the scope of principles to be further determined by the Board.
Companies That Have Already Submitted Declarations
The Resolution defines platforms “operating as crypto-asset service providers on the effective date of the Law No. 7518” within the scope of the provisional Article 11 of the Law as companies that have existing clients and/or clients' custody balances as of the date of the application to the Board. In this context, the applications of companies that have declared to the Board, pursuant to the Announcement, that they have commenced operations but do not have any clients and/or clients' custody balances as of the date of application are not taken into consideration, as their declarations do not meet the conditions stipulated in the Law.
The Resolution also stipulates that the applications of those that do not submit the application form in Annex 2 of the Announcement and those that submit incomplete or insufficient explanations and documents in respect of items (3) and (4) of the document list in Annex 1 of the Announcement will be rejected. Therefore, the applications of platforms that submit incomplete or insufficient explanations and documents regarding the information systems infrastructure, the processes and tools for the protection of client assets, the processes for entering transactions to the blockchain system, integrations with other internal and external systems (AML/CFT systems, reporting to public authorities, etc.), operation and reporting processes, the functioning of risk management processes and the company's custody infrastructure will be rejected.
Platforms whose application are missing documents other than the foregoing will be given a period of 15 business days from the date of the request.
Platforms whose applications were not considered or were rejected will not be able to operate as a platform following the notification to be made by the Board.
However, these companies will be able to reapply by meeting the conditions specified in the Resolution.
Transition Process for Platforms That Submitted a Declaration
Companies that are or will be included in the “List of Operating Companies” prepared by the Board pursuant to the Announcement, will also be required to apply to the Board until the close of business on 8 November 2024 by meeting the conditions stipulated in the Resolution. The companies on the list will be able to continue their operations until the Board's regulations on the operating conditions enter into force.
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.