Turkey is planning to establish a legal framework for cryptocurrencies by 2024, according to the country’s Presidential Annual Program published on October 25th. The framework aims to define crypto assets in order to enable appropriate taxation. Crypto asset providers like exchanges will also be given a legal definition under the new policies.
This move comes as crypto adoption has surged in Turkey against the backdrop of high inflation. Crypto searches in the country rose elevenfold in 2021, making Turkey second only to Nigeria in crypto interest globally. The collapse of the major Turkish exchange Thodex in 2021 highlighted the need for proper oversight. Thodex’s former CEO was recently sentenced to over 11,000 years in prison for fraud.
While details remain scarce, Turkey’s embrace of crypto regulation follows growing crypto usage locally. The Turkish lira’s inflation crisis has led many citizens to embrace cryptocurrencies. Surveys suggest up to 5.5% of the population has made crypto-related searches.
Turkey is also piloting a central bank digital currency, the digital lira. While the government hasn’t yet committed to a full rollout, President Erdogan has supported the project. Tests began in late 2022 and will continue throughout 2024.
Proper regulation could allow Turkey to benefit from its high crypto adoption while protecting consumers. By defining crypto providers and assets, the government can discourage fraud and enable the taxation of a new asset class. The 2024 timeline suggests Turkey aims to find the right balance between innovation and oversight.
