The Amendment on Crypto Assets to the Law No. 6362 on the Capital Markets Entered Into Force

The Amendment on Crypto Assets to Law No. 6362 on the Capital Markets ("Law Amendment - Law No. 7518") entered into force on 26 June 2024, the date of its publication in the Official Gazette.

1. Basic Concepts Regarding the Law Amendment and Crypto Assets

Article 1 of the Amendment defines the basic terms such as wallet, crypto asset, crypto asset service provider ("CASP"), crypto asset custody service and platform.

Wallets, software, hardware, systems or applications that enable the transfer of crypto assets and the online or offline storage of these assets or the private and public keys associated with these assets.

Crypto assets, intangible assets that can be created and stored electronically using distributed ledger technology or similar technology, distributed over digital networks, and that can express value or rights.

CASP platforms, crypto-asset custodians and other entities designated to provide services in relation to crypto-assets, including the initial sale or distribution of crypto-assets, in the regulations to be issued pursuant to this Law.

CASP, the storage and management of the crypto assets of the Platform customers or the private keys that provide the right to transfer from the Wallet in relation to those assets, or other custody services to be determined by the Board.

Platform, crypto asset trading, initial sale or distribution, clearing, settlement, transfer, custody and other transactions as may be determined.

 

2. Competent Authority

The Capital Markets Board (“The Board") will be empowered to establish regulatory procedures, take special and general decisions and impose measures and sanctions in relation to crypto assets that provide rights specific to capital market instruments.

The Board of Directors shall be authorised to determine the principles for the sale or distribution of crypto-assets, other than crypto-assets providing rights specific to capital market instruments, created through the development of distributed ledger technology or similar technological infrastructure, the value of which cannot be separated from such technology, on platforms without being subject to the provisions of the Capital Markets Act regarding capital market instruments.

At the stage of determining the crypto assets that will be subject to these principles, technical reports may be requested from TUBITAK or other affiliated, related or associated institutions and organisations of ministries and other public institutions in order to evaluate them in terms of technical criteria.

In this context, the approval of the technological characteristics of a crypto-asset and the authorisation of its sale or distribution does not constitute a public guarantee. The relations between those who collect money from the public through the sale or distribution of these crypto assets and those who provide them with funds will be subject to the general rules. Natural and legal persons who sign any type of information document prepared and published in a manner to be determined by the Board during these transactions shall be held jointly and severally liable for any damages resulting from incorrect, misleading or incomplete information contained in these documents.

 

3. Establishment of CASP and Qualifications Required

The establishment and commencement of operations of CASPs shall be subject to authorisation by the Board and they shall carry out only such activities as the Board may determine. The principles governing their establishment and commencement of operations, shareholders, managers, personnel, organisation, capital and capital adequacy, liabilities, information systems and technological infrastructure, share transfers, activities they may undertake, temporary or permanent suspension of their activities and other principles and guidelines to be followed in their operations shall be determined by the Board. The Board's approval will be mandatory for share transfers. Transfers made in contravention of the rules subject to these explanations shall not be registered in the share register and the registrations made in the share register in contravention of this provision shall be considered null and void.

CASPs are obliged to make the necessary arrangements, take the necessary measures and establish the necessary internal control units and systems in order to manage their systems in a secure manner. In order for the Board  to approve the establishment and/or commencement of operations of the CASPs, they shall meet the criteria to be determined by TÜBİTAK with regard to their information systems and technological infrastructure.

Accordingly, the shareholders of CASP;

• He/she is not a bankrupt pursuant to Law No. 2004 or other legal provisions, he/she has not declared a concordat, his/her petition for reorganisation by arrangement has not been approved or a decision to postpone bankruptcy has not been taken,
• Not owning or controlling, directly or indirectly, ten per cent or more of the shares or more than ten per cent of the shares in factoring, financial leasing, financing, savings financing, asset management, insurance, reinsurance, pension companies and operators of payment systems, payment service providers and institutions active in the money and capital markets whose operating licence has been withdrawn, with the exception of banks in liquidation or voluntary liquidation, Financing of terrorism and crimes listed in Article 5 of the Law on Prevention of Financing of Proliferation of Weapons of Mass Destruction no. 7262 of 27/12/2020 or crimes against the person of the State, crimes against the signs of sovereignty and the dignity of its organs, crimes against the security of the State, crimes against the constitutional order and the functioning of this order and national defence, not having been convicted of the crime of revealing State secrets, crimes against State secrets and espionage, crimes against relations with foreign states, crimes within the scope of the Anti-Terror Law of 12/4/1991, number 3713, crimes of tax evasion or participation in these crimes, not having been sentenced to imprisonment for a period of five years or more for a crime committed intentionally, or not having a final conviction for the crimes mentioned in this Law,
• Not being prohibited from transactions pursuant to subparagraph (a) of the first paragraph of Article 101 of the Law,
• Have the financial strength, integrity and reputation that the job requires,
• Transparent and open ownership structure

conditions are required.

The members of the Board of Directors and persons authorised to represent CASP without being a member of the Board of Directors must meet the conditions laid down for shareholders, with the exception of the financial strength requirement.

Real persons who alone have the right to receive more than half of the distributable profits of the CASP, or who have the right to be represented on the board of directors by electing or nominating more than half of the number of members under the articles of association of the company, must also meet the above conditions.

Shareholders who directly or indirectly hold shares representing 10% or more of the capital or voting rights of the legal entity that is the founder of the CSD, as well as shareholders who hold privileged shares giving them the right to be represented on the board of directors, even if they hold less than this percentage, must also meet these conditions.

In the event of a change in the shareholding structure after the establishment of the CSD, the legal entity shareholders holding shares directly or indirectly representing 10% or more of the capital or voting rights of the CSD and privileged shares conferring the right to be represented on the board of directors, even if less than that proportion, and the shareholders holding shares directly or indirectly representing 10% or more of the capital or voting rights and privileged shares conferring the right to be represented on the board of directors, even if less than that proportion, must also comply with the above conditions.

Shareholders, whether natural persons or legal entities, who directly or indirectly hold shares representing 10% or more of the capital or voting rights of the CSDs, or privileged shares entitling them to be represented on the board of directors even if they hold less than this proportion, as well as the shareholders referred to in Article 3, point (ç), of the amended law, with the exception of point (a), point (5), shall be obliged to transfer their shares within six (6) months to persons who fulfil the conditions set out in point (a), in the event that they cease to fulfil the conditions set out in point (a). The Board of Directors shall determine how and by whom the voting rights corresponding to the shares to be transferred within the aforementioned period are to be exercised.

The procedures and policies regarding the purchase and sale of crypto assets through the Platforms and the initial sale or distribution of crypto assets, as well as the clearing, transfer and custody of crypto assets, shall be regulated by the Board

CASPs are not subject to the other provisions of this Amendment except for the provisions referred to in this Amendment. The Board shall obtain the opinion of the Banking Regulation and Supervision Agency ("BRSA") for the regulations that will impose obligations on banks

 

4. Measures and Sanctions to be Applied in CASP Activities

Article 96 of the Law shall apply to the measures to be applied to the unlawful activities and transactions of crypto-asset service providers; Article 99 of the Law shall apply to the measures to be applied to the unauthorised activities of crypto-asset service providers; and the provisions of the first paragraph of Article 100 of this Law shall apply to the announcements, advertisements and statements and all kinds of commercial communications of those engaged in the unauthorised activities of crypto-asset service providers.

Engaging in activities for residents in Turkey through platforms located abroad or providing a prohibited activity related to crypto assets to residents in Turkey within the scope of the regulations to be issued by the Board shall also be considered as unauthorised provision of crypto asset services. In the case of any of the following situations: opening a workplace in Turkey, establishing a Turkish website, conducting advertising and marketing activities directly and/or through persons or institutions resident in Turkey with respect to the crypto asset services offered by platforms resident abroad, the activities shall be deemed to be directed to persons resident in Turkey. 

It is also stated that the CMB may require the strengthening of the financial structure of CASPs for a period not exceeding three months, or temporarily suspend their direct activities, revoke their operating licences and limit or revoke the signing powers of managers and employees whose responsibility has been determined, in the event that their financial structure is weakened or they are unable to fulfil their obligations.

It is established that the CMB may decide to remove the content and/or block access to Internet publications that do not comply with the principles established, and that this decision will be notified to the Association of Access Providers. It is also stipulated that those responsible for advertisements, commercials and announcements in media other than the Internet will be subject to sanctions in accordance with the legislation in force.

CASPs are liable for damages caused by their unlawful activities or failure to fulfil their obligations. If the damage cannot be compensated, the members of the CASP may also be liable. CASPs will also be liable for losses of crypto assets resulting from the operation of information systems, cyber-attacks, information security breaches or personnel errors.

 

5. Transitional Provisions for Existing CASPs

Provisional Article 11 added to the Law Amendment introduces a transitional provision for institutions currently operating as CSDs. Accordingly, the CSDs operating at the time of the entry into force of the said regulations will be obliged to apply to the Board within one month of the entry into force of the said regulations and to submit the necessary applications to obtain an operating licence or to take a decision on liquidation within three months and not to accept any new clients.

Those wishing to commence operations after the entry into force of the Law will be required to apply to the Board and submit the necessary applications to obtain an operating licence before commencing their operations. In this regard, it is stipulated that the applications made to the Board will be published on the official website of the Board and that the institutions to be liquidated must announce this situation on their websites and inform their clients. Failure to comply with these obligations constitutes the offence of unauthorised activity of a service provider.

 

6. Provisions for Foreign-Based CASPs

Provisional Article 11, which was added to the amendment to the Law, stipulates that crypto asset service providers based abroad must cease their activities for Turkish residents within three months of the effective date, as specified in the first paragraph of Article 99/A of the Law.

It is stipulated that ATMs and similar electronic transaction devices located in Turkey that allow customers to convert crypto assets into cash or cash into cryptoassets and to transfer crypto assets shall cease their activities within three months of the effective date, and ATMs that do not cease their activities shall be closed by the competent authorities specified in the legislation on opening of workplaces and work permits upon notification of the highest local administrative authority.

You can access the full text of the Law Amendment (in Turkish) here.