On Friday, 16 April 2021, the “Regulation on the Non-Use of Crypto Assets in Payments” (“Regulation“) issued by the Central Bank of the Republic of Turkey (“CBRT“) was published in the Official Gazette No. 31456. There has been no regulation on the use of crypto assets in our legislation to date, and the Regulation in question is the first regulation in this field.
Basis and Justification of the Regulation
The Regulation has been prepared based on the subparagraph (f) and the fourth paragraph of subparagraph (I) of the third paragraph of Article 4 of the Central Bank of the Republic of Turkey Law No. 1211 dated 14/1/1970 and the third paragraph of Article 12 and the sixth paragraph of Article 18 of the Law No. 6493 dated 20/6/2013 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions.
In the statement made by the CBRT, it was stated that crypto assets pose significant risks for the related parties due to the fact that they are not subject to any regulation and supervision mechanism, they do not have a central interlocutor, their market values show excessive volatility, they can be used in illegal activities due to their anonymous structure, wallets can be stolen or used improperly without the owners’ knowledge, and transactions are irreversible.
In the same statement, it was stated that the use of crypto assets in payments is likely to create irreparable grievances for the parties to the transaction and contains elements that may create a weakness of trust.
Content of the Regulation
The Regulation stipulates that crypto assets cannot be used in payments, and crypto assets cannot be used directly or indirectly in the provision of payment services and the issuance of electronic money. As a result of the regulation, with the acceptance that crypto assets cannot be used directly or indirectly in payments, it is understood that these assets have significantly lost their monetary function.
Definition of crypto assets pursuant to Article 3 of the published Regulation; “In the application of this Regulation, crypto asset refers to intangible assets that are created virtually using distributed ledger technology or a similar technology and distributed over digital networks, but are not characterised as fiat money, dematerialised money, electronic money, payment instrument, security or other capital market instrument.” It is made as follows. Therefore, it is understood that other digital assets that do not fall within the scope of the said definition will not be affected by the Regulation.
In addition, Article 4 of the Regulation stipulates that payment service providers may not develop business models in a way that crypto assets will be used directly or indirectly in the provision of payment services and the issuance of electronic money, and may not provide any services in this regard. The same article stipulates that payment and electronic money institutions may not act as an intermediary for platforms offering trading, custody, transfer or issuance services for crypto assets or fund transfers to be made from these platforms. By specifying two different scopes as “payment service providers” and “payment and electronic money institutions” in this article, it is understood that a separate prohibition is imposed on payment and electronic money institutions in terms of fund transfer transactions. Therefore, after the Regulation enters into force, fund transfers regarding crypto assets can only be made through banks.
The regulation does not prohibit the trading and/or taxation of crypto assets, but only restricts their use in the payment area. Therefore, it can be said that transactions with crypto assets on exchanges can continue, but the channels through which users will transfer funds to these exchanges will narrow.
The Regulation was published in the Official Gazette on 16.04.2021 and will enter into force on 30.04.2021.
