Turkey is seeking to implement a regulatory framework that will govern the digital currency industry. The country’s Ministry of Treasury and Finance confirmed it has finalized a digital currency bill that it would propose to parliament in October, in a bid to protect investors and prevent money laundering.
Turkey has been experiencing surging inflation, a plunge in demand for its debt and a rising unemployment rate. These factors have pushed many to look to digital currencies, with most betting on them as speculative assets. The government has attempted to curb the rise of digital currencies, most recently banning it as a payment method. And now, it wants to enforce a law that curtails the use of digital currencies with a goal of protecting investors.
Turkey’s Ministry of Treasury and Finance announced that a draft bill to establish a legal framework for the digital currency industry is now ready. This bill is set to be presented to parliament, otherwise known as the Grand National Assembly of Turkey, in October 2021 when sessions commence.
Commenting on the bill, Deputy Minister Şakir Ercan Gül stated that Turkey needs stricter regulations for the new asset class than most countries in Europe and North America. He noted that since Turkey has a free-floating exchange rate system, digital currencies could have a significant impact on the value of the local currency, the lira. A free-floating exchange rate system is one in which exchange rates are determined by demand and supply.
The bill will define the different classes of digital assets. It will also set policies governing their issuance, distribution, trading and custodial services. It also establishes that the country’s Capital Markets Board will oversee the digital currency companies while the Banking Regulation and Supervision Agency will be in charge of protecting the consumer and ensuring market integrity.
The bill comes just three months after Turkey’s central bank banned digital currencies for payments. It described digital currencies as risky because “they are neither subject to any regulation and supervision mechanisms nor a central regulatory authority.”
Despite the ban, digital currencies are thriving in Turkey. Unfortunately, with the rise in their adoption has come a surge in related scams, with some fraudsters taking off with billions of dollars in investors’ funds. One of the largest scams is Thodex, an exchange that took off with $2 billion from 400,000 investors. Authorities have since arrested 62 people for the scam.