The Turkish authorities will require these platforms to request their customers for their proof of residency and KYC documents. According to a government decree, the new measure took effect on May 1st.
The Turkish government recently issued a decree, effective as of May 1st, on exchanges of Bitcoin (BTC) and other cryptocurrencies. The document establishes that these companies must comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.
Besides, the authorities hold “crypto-asset service providers” responsible for ensuring the legal use of the assets that they manage. Therefore, the latter must comply with a series of regulations to control these types of assets.
These platforms “were not under any regulatory and supervisory mechanism or a central regulatory authority.” For that reason, the Turkish monetary authorities considered it appropriate to implement the measure.
The 32 exchanges in the Turkish market will now have to follow strict regulations from MASAK (Financial Crimes Investigation Board). Among other rules, the exchanges must require their customers to provide proof of residency and know-your-client (KYC) identity documents.
Likewise, crypto-asset trading companies must block customers who are on the list of infringers. Additionally, they have to report to the government suspicious business activities and the services that they provide to institutional customers.
These would be only the first rules of the game that Turkey imposes as there may be more regulations shortly.
This occurred after the ban on the use of Bitcoin and other cryptocurrencies to pay for products and services. The regulatory authorities announced it on April 16th, and it went into effect on April 30th.
Nobody knows the implications of these government decisions on the Turkish economy as the Eurasian country has given great importance to Bitcoin. Many people have used it as a store of value in the face of the devaluation of the local fiat currency.
In the last 6 years, the Turkish lira has been losing value, reaching 16% so far in 2021 alone. Meanwhile, Bitcoin has appreciated by more than 1,200% in the last 12 months.
Two Turkish Cryptocurrency Exchanges Close Abruptly
The new demands on exchanges come after the closure of two major Turkish cryptocurrency exchanges: Thodex and Vebitcoin.
Local prosecutors opened an investigation on the first of them for an alleged case of collective fraud. The founder and CEO of the exchange, Faruk Fatih Ozer, left the country for Albania. The authorities accused him of allegedly appropriating hundreds of millions of US dollars worth of cryptocurrencies.
According to preliminary estimates, the stoppage would affect almost 400,000 users, who cannot withdraw or deposit cryptocurrencies.
For that reason, the Turkish security forces arrested more than 80 people. Among them are Ozer’s brother and sister, as well as top executives from the company.
The Thodex platform preceded Vebitcoin, which notified its users that it would cease all activities. In a brief statement on their website, they said that they were facing financial stress.
“We regret to say that this situation has led us to a very difficult process in the financial field. We decided to stop our activities to comply with all regulations and claims,” Vebitcoin executives wrote.
By Willmen Blanco