In a statement on Tuesday, the Turkish Finance Minister, Mehmet Simsek, announced that Turkey is preparing to enact fresh legislation concerning cryptocurrency assets to enhance its compliance with the Financial Action Task Force (FATF). In 2021, the FATF included Turkey in its “grey list” due to its failure to address concerns related to money laundering and terrorist financing.
The forthcoming cryptocurrency legislation aims to tackle the specific issues outlined in the FATF’s 2021 report, which pointed out deficiencies in addressing money laundering and terrorist financing within the existing Turkish legal framework. Minister Simsek emphasized that this cryptocurrency legislation is just one part of a broader set of legislative changes designed to align with the FATF’s 40-point compliance guidelines.
Turkey’s inclusion in the FATF’s grey list had a detrimental impact on foreign investment flowing into the country. This, coupled with Turkey’s pre-existing challenges of high inflation and widespread unemployment, hindered the nation’s efforts to revive its economy. According to estimates from the International Monetary Fund (IMF), being on the FATF’s grey list can reduce capital inflows by approximately 7.6% of GDP, with foreign investment suffering significant declines.
Minister Simsek highlighted that the proposed legislation concerning cryptocurrency assets will comprehensively address all 40 points on the FATF checklist, ultimately helping Turkey to exit the grey list. He stated,
“We will promptly present a legislative proposal regarding crypto-assets to the parliament. Subsequently, there should be no impediment for Turkey to remain on the grey list, assuming there are no other political considerations.”
Additionally, Turkey is working on a new regulatory framework for cryptocurrencies, which will encompass definitions, taxation of crypto-assets, and the regulation of exchanges and other related service providers.
The FATF, headquartered in Paris, is a financial oversight organization established by the G7 nations. According to reports, the FATF had previously cautioned Turkey in 2019 about its significant shortcomings in freezing assets associated with money laundering and terrorist financing.