Legislation on crypto assets passed the Commission

The bill to amend the capital markets law, which includes regulations on crypto assets, was accepted by the TBMM Planning and Budget Committee. The law regulation on crypto assets was accepted by the TBMM Planning and Budget Committee. The new regulation aims to protect the rights and interests of investors. The proposal adds definitions regarding crypto assets to the Capital Markets Law. Accordingly, "wallet" is defined as software, hardware, systems or applications that enable the transfer of crypto assets and the online or offline storage of these assets or private and public keys related to these assets. According to the proposal, "crypto assets" are defined as intangible assets that can be created and stored electronically using distributed ledger technology or similar technology, distributed over digital networks, and have a value or right. "Crypto asset service provider" shall be defined as platforms, institutions providing crypto asset custody services and other institutions determined to provide services related to crypto assets, including the initial sale or distribution of crypto assets in the regulations to be made based on this Law, while "crypto asset custody service" shall define the storage, management of the crypto assets of platform customers or the private keys that provide the right to transfer these assets from the wallet or other custody services to be determined by the Board. It is intended to authorize the CMB "Platform" is defined as institutions where one or more of the crypto asset purchase-sale, initial sale or distribution, exchange, transfer, storage required by these and other transactions that may be determined are carried out. It is intended to authorize the Capital Markets Board to determine the principles for the issuance of capital market instruments as crypto assets without being included in the Central Registry Agency (CRA) system. Accordingly, the Board may determine the principles regarding the issuance of capital market instruments as crypto assets instead of their issuance in dematerialized form in accordance with the provisions of this article and their monitoring in dematerialized form by the CRA in the electronic environment provided by the service providers where they are created and stored. In case of issuance of capital market instruments as crypto assets; records in electronic environment where crypto assets are created and stored will be taken as basis in monitoring the rights, asserting them against third parties and transferring them. The Board may require integration between these electronic environment records and the CRA system. The procedures and principles regarding the implementation of this regulation will be determined by the Board. Crypto asset service providers According to the Regulation, crypto asset service providers must obtain permission from the Board in order to be established and start operating. They will exclusively carry out the activities to be determined by the Board. The principles regarding their establishment and start of operations, their partners, managers, personnel, organization, capital and capital adequacy, liabilities, information systems and technological infrastructures, share transfers, activities they may perform, temporary or permanent suspension of their activities and other principles and principles they must comply with during their activities will be determined by the Board. It will be mandatory to obtain the Board’s permission in share transfers. Transfers made in violation of these regulations will not be recorded in the share ledger and the records made in the share ledger in violation of this provision will be deemed invalid. Crypto asset service providers will be obliged to make the necessary arrangements, take precautions and establish the necessary internal control units and systems for the secure management of their systems. In order for the establishment and/or commencement of operations of crypto asset service providers to be permitted by the Board, compliance with the criteria to be determined by TÜBİTAK regarding their information systems and technological infrastructures will be sought. The condition that service provider partners should not be bankrupt The conditions that the partners of crypto asset service providers must meet are also stipulated in the proposal. Accordingly, in addition to the conditions that the partners of crypto asset service providers should not be bankrupt, have not declared composition, have not had their restructuring application approved by means of reconciliation or have not been subject to a bankruptcy postponement decision, they should not have a final conviction for the crimes listed in the relevant laws, should not be prohibited from trading; on the other hand, they should have the necessary financial strength and the honesty and reputation required by the business, and the partnership structure should be transparent and open. The proposal aims to provide the necessary financial strength and the honesty and reputation required by the business by introducing certain minimum conditions similar to other capital market institutions to the partners and board members of the platforms. The CMB is authorized to regulate the procedures and principles regarding the purchase and sale of crypto assets through platforms and the initial sale or distribution; the exchange, transfer and storage of crypto assets. Crypto asset service providers will not be subject to other provisions of the Law other than the referred provisions. Within the scope of the relevant paragraphs of the Law, the Board will be authorized to regulate and direct the implementation by establishing regulatory procedures and making special decisions. In accordance with the relevant articles of the Law, the opinion of the Banking Regulation and Supervision Agency (BRSA) will be obtained for the regulations that will impose obligations on banks. The CMB will be authorized to establish regulatory procedures, make special and general decisions and apply measures and sanctions regarding crypto assets that provide rights specific to capital market instruments. The Board may determine the principles regarding the sale or distribution of crypto assets created through the development of distributed ledger technology or a similar technological infrastructure, the value of which cannot be separated from this technology, other than crypto assets that provide rights specific to capital market instruments, through platforms without being subject to the provisions of the Law regarding capital market instruments. In order to make an assessment in terms of technical criteria during the determination of crypto assets that will be subject to these principles, it may request a technical report from TÜBİTAK or related, affiliated institutions and organizations affiliated to ministries and other public institutions. In this context, the approval of the technological features of a crypto asset and the permission for their sale or distribution will not mean that they are guaranteed by the public. The relations between those who collect money from the public by selling or distributing these crypto assets and those who provide funds to them will be subject to general provisions. During these transactions, real and legal persons who sign any kind of information document prepared and announced in a manner determined by the Board will be jointly and severally liable for damages arising from incorrect, misleading or incomplete information in these documents. The duties and authorities of institutions and organizations arising from other legislation regarding crypto assets will be reserved. The provisions in this proposal will not apply to crypto assets other than crypto assets traded on platforms within the scope of the principles within the scope of the regulation. The provisions of the Law on the Protection of the Value of Turkish Currency and relevant legislation regarding all kinds of transactions made with crypto assets will be reserved. The Law on Movable Pledges in Commercial Transactions will not apply to pledge agreements involving crypto assets. The contract rules will be determined by the Board. The proposal stipulates the principles regarding the activities of crypto asset service providers and the transfer and storage of crypto assets. Accordingly, contracts signed between crypto asset service providers and customers who want to transact in them may be established in written form or by using remote communication tools, or by methods that the Board determines can replace the written form and will be carried out via an information or electronic communication device and will allow verification of customer identity, and the procedures and principles regarding this will be determined by the Board. The Board may determine the arrangement, scope, amendment, fees and expenses, termination, and termination of the contracts between crypto asset service providers and their customers, and the minimum matters that must be included in the content of these contracts. Any contract terms that eliminate or limit the liability of crypto asset service providers to their customers will be deemed invalid. Platforms will be obliged to establish internal mechanisms that will effectively resolve the objections and complaints of their customers regarding their transactions. Crypto asset service providers will be obliged to identify customers within the scope of the Law on Prevention of Laundering Proceeds of Crime and other relevant legislation. It will be mandatory for the platforms to establish a written listing procedure for determining the crypto assets to be traded or first sold or distributed by them and for terminating their trading; principles and guidelines may be regulated by the Board in this regard. The principles and guidelines to be determined may include technical criteria regarding the technological features of crypto assets, after receiving the opinion of TÜBİTAK or other institutions and organizations deemed necessary. The listing of a crypto asset by the platforms will not mean that it is guaranteed by the public. Prices will be formed freely on the platforms Prices will be formed freely on the platforms. Platforms will determine the order and transaction principles, establish the necessary surveillance system within their own bodies and take all kinds of preventive measures in order to ensure that transactions are carried out in a reliable, transparent, effective, stable, fair, honest and competitive manner, to detect, prevent and prevent market-distorting actions and transactions. It will be obliged to make determinations regarding market-distorting actions and transactions carried out on the platform, to take the necessary measures including restricting, suspending and closing the accounts carrying out such actions and transactions, and to report the findings reached to the Board by including them in a report. The relations between the platforms and their customers and the disputes arising between the parties due to the transactions carried out on the platforms will be subject to general provisions. The fact that the platforms have been granted an operating permit by the Board will not mean that the transactions are under the guarantee of the public. Crypto assets will not be subject to investor compensation provisions. Records regarding the wallets to which customers' crypto asset transfers are made and the accounts to which fund transfers are made will be kept by crypto asset service providers in a secure, accessible and traceable manner. The integrity, accuracy and confidentiality of all transaction records will be ensured. The regulations made by the Board and the Financial Crimes Investigation Board Presidency will be complied with in the crypto asset transfer transactions of customers. The information and data intended to be included in the transfer messages regarding the sender and recipient will be sent securely by crypto asset service providers within the periods specified in the regulations. For this purpose, software applications and technological tools that enable messaging, such as distributed ledger technology, another independent messaging platform or application interface, can be used. It will be essential for the crypto assets of the platform customers to be kept in their own wallets. It will be mandatory for the custody service for crypto assets that the customers do not prefer to keep in their own wallets to be provided by banks authorized in accordance with the regulation to be made by the Board and deemed appropriate by the BRSA or by institutions authorized by the Board to provide crypto asset custody services, and for the cash belonging to the customers to be kept in banks. The Board will be authorized to determine separate principles for custody for each crypto asset or within the scope of the technological features on which they are based or the quality and quantity of crypto assets. Cash and crypto assets belonging to the customers will be separate from the assets of the crypto asset service providers and the records will be kept in accordance with this regulation. Cash and crypto assets of the customers cannot be seized, pledged, included in the bankruptcy estate and no precautionary measures can be taken on them, even if they are for public receivables due to the debts of the crypto asset service providers, and the assets of the crypto asset service providers due to the debts of the customers. The procedures and principles regarding investment consultancy and portfolio management for crypto assets will be determined by the CMB. Crypto asset service providers will comply with the principles determined by the Board regarding their publications, announcements, advertisements and announcements, and all kinds of commercial communication. Crypto asset service providers will be given an authorization document indicating the activities they will perform. The positive opinion of the BRSA will be sought for banks. The audit will be carried out by independent institutions announced by the CMB The financial audit and independent audit of information systems of crypto asset service providers will be carried out by independent audit institutions included in the list announced by the Capital Markets Board (CMB). The Bill of Law on Amendments to the Capital Markets Law, which includes regulations regarding crypto assets and was accepted by the TBMM Planning and Budget Committee, is amending the Capital Markets Law. Accordingly, it will be essential to monitor customer cash held in banks separately from the investment institution's own cash assets in individual accounts to be opened for the customers of the relevant investment institution. The principles regarding the interest accrual of customer accounts in banks will be determined by the CMB. Customer accounts cannot be shown as collateral for loans, and no blockages, pledges or similar restrictions can be established on these accounts in favor of the investment institution. The responsibility of banks in this context will be limited to the notifications made by the investment institutions. All administrative and judicial demands such as precautions, seizures and similar requests regarding customers whose balances are in these accounts will be exclusively notified to the relevant investment institution and will be fulfilled by the investment institution. Accounts opened by investment institutions with banks for customer cash will be monitored in a separate account in the bank accounting. Banks will be required to notify the Board in the manner and frequency determined by the Board regarding the accounts in which the investment institution customer cash is recorded. This obligation can also be fulfilled through a system allocated to the Board by the Banking Regulation and Supervision Agency (BDDK). Service providers must be members of the TSPB Crowdfunding platforms and crypto asset service providers will be required to be members of the Capital Markets Association of Turkey. This will ensure that they are represented within a professional organization and that they can communicate with the sector through a single common point. It is also aimed to benefit from the self-regulatory function of the Capital Markets Association of Turkey in ensuring the self-discipline of the sectors. The proposal stipulates the measures to be implemented in the event that unauthorized capital market activities are determined to be conducted via the internet. Accordingly, with the developing technology, in accordance with the removal of the domestic-international distinction in crimes where the decision to remove the content or block access may be made due to problems experienced in determining the content or location provider of publications subject to crime committed in the internet environment, the domestic-international distinction is also being removed in the conduct of unauthorized capital market activities via the internet. The measure to remove the content is also being added to the measures to be implemented. In the event that unauthorized capital market activities are determined to be conducted via the internet, the Board will decide on the removal of content or blocking of access to publications made via the internet and will be sent to the Access Providers Association for implementation. Measures to be implemented in the activities of crypto asset service providers The proposal also regulates the measures to be implemented in the activities of crypto asset service providers. Platforms established abroad conducting activities targeting persons resident in Turkey or offering a prohibited activity related to crypto assets to persons resident in Turkey within the scope of the regulations to be made by the Board will also be considered unauthorized crypto asset service provision. In the event that any of the following situations exist, such as opening a workplace in Turkey, creating a Turkish website, or conducting promotional and marketing activities directly or through persons or institutions resident in Turkey regarding the crypto asset services offered by platforms established abroad, the activities will be deemed to be targeted at persons resident in Turkey. Additional criteria for determining that the activities are targeted at persons resident in Turkey may be determined by the Board. The Board shall be authorized to request that the financial structures of crypto asset service providers be strengthened within an appropriate period of time not exceeding 3 months, or to temporarily suspend the activities of crypto asset service providers directly without giving any time limit, in case it is determined that crypto asset service providers cannot fulfill their cash payment and crypto asset delivery obligations arising from their activities or will not be able to fulfill them in a short time, or independently of these, that their financial structures are seriously weakened or that their financial situation is weakened to the extent that they cannot meet their commitments. The Board shall also be authorized to revoke their activity authorizations, limit or revoke the signature authorities of managers and employees who are found responsible. In cases where it is learned that advertisements, announcements and announcements are made over the internet in violation of the principles or prohibitions determined by the Board, information is learned that investment consultancy or portfolio management is provided for crypto assets in violation of the principles determined by the Board, or the Board determines that crypto asset service provision activities are carried out over the internet without obtaining permission, the Board may decide to remove the content or block access to publications made over the internet, and shall send the decision to the Access Providers Association for implementation. If it is determined that advertisements, announcements and announcements have been made in media other than the internet in violation of the principles determined by the Board, the advertisements and announcements of those responsible may be stopped in accordance with the relevant legislation, and the advertisements and announcements with unlawful documents may be collected. The said procedures will be carried out by the authorized administrations specified in the legislation regarding business opening and operating licenses upon the notification of the highest civil administrator of the locality. Inspection and sanctions The proposal stipulates the inspection of crypto asset service providers and the sanctions to be applied. Accordingly, personnel affiliated to the ministries, relevant, related institutions and organizations and other public institutions may be assigned upon the request of the Board, with the approval of these institutions and organizations, to conduct inspection activities together with the Board personnel for the inspection of crypto asset service providers or to supervise those conducting inspection activities in a manner that their own regulations allow, without the requirement of being professional personnel, in a manner that provides technical support to those conducting inspection activities. The financial audit and independent audit of information systems of crypto asset service providers will be conducted by independent audit institutions included in the list announced by the Board. Additional procedures and principles regarding information systems audit will be determined by the Board after receiving the opinion of TÜBİTAK or other institutions and organizations deemed necessary. The Board personnel and other assigned personnel may accompany each stage of the information systems audits to be conducted by authorized institutions within the framework of the program to be determined by the Board as observers without undermining the principle of auditor independence. In this way, those participating in the audit will not be responsible for the audit results reached by the independent audit institutions and will not be able to use the knowledge of the authorized institution to benefit themselves or another authorized institution. Crypto asset service providers will be responsible for the damages arising from the illegal activities of crypto asset service providers and their failure to fulfill their cash payment or crypto asset delivery obligations. Crypto asset service providers will be responsible for crypto asset losses arising from acts such as the operation of information systems, all kinds of cyber attacks, information security violations or any behavior of the personnel within the scope of the relevant provision of the Turkish Code of Obligations. If the losses cannot be compensated from the crypto asset service providers or if it is clearly obvious that they cannot be compensated; the crypto asset service provider members will be responsible for the losses to the extent that they can be charged according to their faults and the requirements of the situation, and the relevant provision of the regulation will be applied regarding personal liability. Damages arising from interruptions in services provided without the fault of service providers, temporary failure to transmit orders or to make transactions or transfers, and similar situations will not be evaluated within this scope. Administrative fines will be imposed on those who act contrary to the regulations. Accordingly, "crimes of not providing information, documents, obstructing audit"; "crimes of irregularities in legal books, accounting records, financial reports"; "crimes of failure to comply with confidentiality obligations regarding information requested in audit" are also foreseen for crypto asset service providers. In case of sale or distribution contrary to the regulation and relevant regulations, sanctions within the scope of relevant provisions will be applied. All kinds of administrative and judicial demands such as precautions, seizures and similar regarding cash and crypto assets belonging to customers will be fulfilled by crypto asset service providers. In case cash and crypto assets belonging to customers are seized by judicial authorities, all necessary procedures for the storage of seized assets in wallets established by institutions providing custody services authorized by the Board will be established by judicial authorities. Within the scope of the examinations and audits conducted under the provisions of the law titled “market distorting actions,” “information abuse,” and “market fraud,” the Board may decide to remove content or block access to publications made via the internet, and the decision will be sent to the Access Providers Association for implementation. Imprisonment from 3 to 5 years and a judicial fine from 5,000 days to 10,000 days Real persons and officials of legal entities who are found to be operating as crypto asset service providers without obtaining permission will be sentenced to imprisonment from 3 to 5 years and a judicial fine from 5,000 days to 10,000 days. With the Bill on the Amendment of the Capital Markets Law, which includes regulations on crypto assets and was accepted by the Planning and Budget Committee of the Grand National Assembly of Turkey, the financial tables to be taken into consideration in detecting non-conformities and the sanctions to be applied are determined; the authority to regulate the procedures and principles regarding the determination of gross sales revenue and pre-tax profit to be taken as basis in determining the upper penalty limit is granted to the Capital Markets Board. Considering that the expense items of the relevant person against whom an administrative fine will be imposed can be freely determined between the parties and that there is no causal link with the administrative fines to be imposed or the amount transferred as hidden profit, it is clarified that the said expense items will not be taken into account in the benefit calculations and that it will not be checked whether the profit is realized in the benefit calculation. In this way, it is aimed to make the benefit calculations regarding the administrative fines or the amount transferred as hidden profit easier and faster. Natural persons and legal entities who are found to be operating as crypto asset service providers without obtaining permission will be punished with imprisonment from 3 to 5 years and a judicial fine from 5 thousand days to 10 thousand days. Embezzlement by cryptoasset service providers The chairman and members of the board of directors of the cryptoasset service provider and other members who embezzle money or documents or bills in place of money, other goods or crypto-assets entrusted to them or which they are obliged to protect, keep and monitor due to their duty as a cryptoasset service provider shall be punished with imprisonment from 8 to 14 years and a judicial fine of up to 5,000 days; and shall compensate the damages of the cryptoasset service provider. If the crime is committed through fraudulent behavior aimed at preventing the embezzlement from being revealed, the perpetrator shall be sentenced to imprisonment from 14 to 20 years and a judicial fine of up to 20,000 days. However, the amount of the judicial fine cannot be less than 3 times the damage suffered by the cryptoasset service provider and its customers. A cryptoasset service provider whose operating permit has been revoked; It will be considered as embezzlement if the real person partners who have legally or actually managed or controlled the crypto asset service provider or its customers' resources are used directly or indirectly for their own benefit or for the benefit of others in a way that endangers the safe operation of the crypto asset service provider in any way, and thus harms the crypto asset service provider or its customers. Those who commit these acts will be sentenced to imprisonment from 12 to 22 years and a judicial fine of up to 20 thousand days; however, the amount of the judicial fine cannot be less than three times the damage suffered by the crypto asset service provider and its customers. In addition, it will be decided that the damage incurred will be paid jointly. If the embezzled money or documents or promissory notes replacing the money, other goods or crypto assets are returned as is or the damage suffered is fully compensated before the investigation begins, the penalty will be reduced by two-thirds. If the embezzled money or documents or promissory notes, other goods or crypto assets are voluntarily returned or the damage suffered is fully compensated before the prosecution begins, the penalty to be imposed will be reduced by half. If this situation occurs before the verdict, the penalty to be imposed will be reduced by one third. The penalty to be imposed will be reduced from one third to half due to the low value of the money or documents or promissory notes, other goods or crypto assets constituting the subject of the embezzlement crime on the date of the crime. Personal liability regarding crypto assets The chairman and members of the board of directors, other members, real person partners who have legally or de facto management or control of the crypto asset service provider who are determined to have made decisions and transactions considered as embezzlement, in order to ensure that their personal liability is primarily covered from the amount determined to have been embezzled, limited to the damage they have caused to customers, may be ruled directly by the court upon the request of the Board. If these decisions and transactions are made for the purpose of providing benefits to third parties, they will also be applied to the persons providing benefits based on the benefits they provide. The assets of those for whom a personal bankruptcy decision is made, those that are in cash, will be used directly, and those that are not, will be converted into cash, to pay the losses of the customers. The losses of the customers will be paid first from the assets. If the total loss of the customer cannot be covered, a cash payment will be made. After the total loss of the customer is covered, the remaining amount will be returned to those for whom a personal bankruptcy decision is made. Special investigation procedure for the crime of embezzlement of crypto assets Investigations and prosecutions will be carried out upon the written notification of the Board or, in cases where delay is deemed undesirable, ex officio by the public prosecutors and the Board will be notified. In the event that a public lawsuit is filed upon application, a copy will be notified to the Board together with the acceptance of the indictment and the Board will also gain the status of "participant". If it is decided that there is no need for prosecution, this decision will be notified to the Board and the relevant parties to the investigation, depending on the relevance. The Board and the relevant parties will be authorized to object to these decisions notified to them in accordance with the Code of Criminal Procedure. Cases related to the defined embezzlement crime will be heard in the No. 1 high criminal courts named after the province where the act was committed. In places deemed necessary, upon the proposal of the Ministry of Justice, the Board of Judges and Prosecutors may assign other high criminal courts in those places to try such crimes. Conditional release provisions will not be applied to those convicted of these crimes as long as they do not pay the debts and compensations to the Treasury or these debts and compensations cannot be collected from their assets. Each year, one percent of all revenues of the platforms, excluding interest revenues from the previous year, will be paid to the Capital Markets Board and one percent to the TUBITAK budget by the end of May of the relevant year and recorded as revenue. Transitional provisions regarding crypto asset service providers Those who were operating as crypto asset service providers on the date the Law enters into force will be required to submit a declaration stating that they will apply to the Board with the documents to be determined by the Board within one month from the effective date and that they will make the necessary applications to obtain an operating permit by meeting the conditions stipulated in the secondary regulations or that they will make a liquidation decision within three months without harming the rights and interests of the customers and that they will not accept new customers during the liquidation process. Those who want to start their activiti