Following the legal framework established for crypto assets and crypto asset service providers (“CASPs“) under the Capital Markets Law No. 6362 (“CML“) and the resolutions of the Capital Markets Board (“CMB“) dated 8 August 2024 and 19 September 2024, significant amendments have been introduced in the legislation of the Financial Crimes Investigation Board (“MASAK“) as published in the Official Gazette dated 25 December 2024, with regards to the classification of CASPs as “financial institution”, required sender and recipient information in crypto asset transfers, and the obligations imposed on CASPs such as compliance programs, e-notifications, know your client (KYC) and remote identification requirements. Accordingly, it has become mandatory for CASPs to verify the sender’s information for all transactions amounting to TL 15,000 or more, and CASPs intermediating the trading or custody of privacy-based crypto assets are prohibited from conducting remote identification.

Additionally, with the resolution of the Public Oversight, Accounting, and Auditing Standards Authority (“KGK“) published in the Official Gazette on 19 December 2024, regulations were made in the financial reporting standards regarding the measurement and classification of crypto assets , and it was decided to introduce the ‘Digital Assets’ item in the financial statements.

In this context, the legal framework established by the CML and the CMB’s resolutions has been enhanced in terms of MASAK legislation and financial reporting standards, and many new aspects regarding the implementation have been clarified.

The key elements of these amendments are summarized below:

Amendments to the MASAK Legislation

1. CASPs are classified as “financial institution” under MASAK legislation.

With the amendments to the Regulation on Measures Regarding the Prevention of Laundering Proceeds of Crime and Financing of Terrorism (“Measures Regulation“), CASPs are included within the definition of “financial institution.” Consequently, similar to banks and intermediary institutions, the obligations of CASPs under the MASAK legislation have expanded.

As they are classified as financial institutions under the MASAK legislation, CASPs are made subject to obligations such as to take necessary precautions to monitor transactions based on a risk-based approach, to establish risk management systems and to adopt measures against technological risks. The provisions regulated for financial institutions under MASAK legislation concerning third-party reliance, cross-border correspondent relationships, and relations with high-risk countries have become applicable to CASPs.

2. CASPs must establish a compliance program and appoint compliance officers.

With amendments to the Regulation on Compliance Programs for Obligations Regarding the Prevention of Laundering Proceeds of Crime and Financing of Terrorism, CASPs are included among “entities required to implement compliance programs”. Accordingly, CASPs are obliged to take measures such as (i) establishing corporate policies and procedures, (ii) conducting risk management activities, (iii) carrying out monitoring and control activities, (iv) appointing compliance officers and establishing a compliance unit, (v) conducting training activities, and (v) performing internal audit activities.

CASPs declared to be in operation by the CMB are required to appoint compliance officers and assistant compliance officers by 25 January 2025, to establish compliance programs within one month following such appointments, and submit commitment forms as annexed to the relevant regulation concerning corporate policies determined within this scope to MASAK by the same date.

3. Detailed provisions for crypto asset transfers have been introduced.

Information regarding the sender and recipient in crypto asset transfer transactions intermediated by CASPs.

Article 24/A added to the Measures Regulation, effective from 25 February 2025, imposes obligation on CASPs to obtain sender and recipient information for crypto asset transfers. Known as the “travel rule”, these provisions require CASPs to include the following information regarding the sender in the messages regarding crypto asset transfer transactions amounting to TL 15,000 or more intermediated by CASPs and to confirm the accuracy of this information separately:

1. full name, title of legal entities or complete name of non-legal entities;
2. wallet address or, in its absence, transaction reference number;
3. at least one of the information that can be used to identify the sender, such as address or place and date of birth or customer number, citizenship number, passport number, tax identification number.

It is sufficient to include the information specified in (a) and (b) for the recipient in crypto asset transfer transactions amounting to TL 15,000 or more, and for both the sender and the recipient in crypto asset transfer transactions amounting to TL 15,000 or less, and it is not mandatory to confirm this information separately.

Additionally, it is regulated that this information regarding the sender should be included in the entire message chain from the first order to the final addressee, all CASPs intermediating the transfer should be included and this information should be transmitted at every stage of the transfer, and it is intended to ensure the traceability of crypto asset transfers.

The declaration method to be applied in transfers made with an unregistered wallet address or in transfers intermediated by CASPs established abroad and not obliged to share this information.

In crypto asset transfers sent to or received from a wallet address that is not registered with any CASP or in crypto asset transfers received from or sent to a CASP or a financial institution authorised to transfer crypto assets, which is established abroad and is not obliged to share information regarding the sender and recipient according to its own legislation, it is regulated that a declaration can be obtained from the customers for the information regarding the wallet owners. In these cases, additional information and documents may be requested from the customer about the transfer parties within the framework of the risk-based approach; in addition, it is regulated that if sufficient information cannot be obtained about the transaction parties, it is possible to refrain from making the transfer or to limit the transactions with such financial institution or to terminate the business relationship.

4. It is regulated that MASAK will mainly send e-notifications to CASPs and that CASPs must apply to MASAK for e-notification account opening.

Amendments to the Regulation on Procedures and Principles Regarding the Electronic Notification System of the Financial Crimes Investigation Board stipulate that CASPs are e-notification recipients. Accordingly, CASPs announced to be operating by the CMB must apply to MASAK for e-notification account opening within one month following 25 December 2024.

5. Know-Your-Customer (KYC) principles for CASPs have been clarified.

With amendments to the Measures Regulation, CASPs are obliged to conduct identification and take necessary measures to reveal the ultimate beneficiary of the transaction for crypto asset transfers with a transaction amount or the total amount of multiple interconnected transaction of TL 15,000 or more.

6. It has been clarified that the regulations enabling the simplification of the measures related to KYC are not applicable to CASPs and the obligations of CASPs within the scope of remote identification have been regulated.

With the amendment to the General Communiqué No. 5 of the Financial Crimes Investigation Board, the list of circumstances where simplified measures can be applied has been amended to include only the activities of games of chance and betting, and the possibility of applying simplified measures for CASPs has been abolished effective from 25 February 2025.

In addition, CASPs are included in the scope of the General Communiqué No. 19 of Financial Crimes Investigation Board. Accordingly, it is regulated that, until specific provisions on remote identification in crypto assets legislation are introduced, CASPs must carry out remote identification in the establishment of a continuous relationship with their real person customers in accordance with the methods and principles in the referred communiqué.

7. Enhanced identification measures are required for privacy-based crypto-assets.

It has been regulated that CASPs that intermediate the trading or custody of privacy-based crypto assets cannot carry out remote identification. In addition, in the establishment of a continuous business relationship, it is obligatory to make deposits and withdrawals before the CASPs, including the first financial transaction, through a debit or credit card account consistent with the customer’s identity information.

Changes in Financial Reporting Standards

With the KGK’s resolution on “Amendments to the Financial Reporting Standard for Large and Medium-Sized Enterprises on Crypto Assets” published in the Official Gazette on 19 December 2024 and effective for reporting periods starting from 1 January 2024, crypto assets are defined similarly as under the CML, and additionally, it is emphasized that crypto assets are not categorized as fiat, electronic, or digital money, payment instruments, securities, or other capital market instruments.

With this regulation, accounting principles regarding the measurement, classification and reporting of crypto assets have been regulated; and the characteristics of crypto assets and the principles regarding the measurement of these assets have been determined.

In addition, items named ‘Digital Assets’ have been introduced to the consolidated and standalone financial statements under current and non-current assets, and footnote disclosures to be made regarding crypto assets have been regulated.

In conclusion, with these amendments to the MASAK legislation, it is intended to make crypto asset transactions and their parties traceable, and significant regulations have been introduced in relation to laundering proceeds of crime, preventing terrorist financing and combating the illicit economy. We believe that the principles regarding crypto assets and CASPs have been determined by different regulatory bodies in addition to the capital markets legislation and the CMB’s principle decisions, new aspects of the implementation have been clarified and that additional regulations will be made in the near future.