Regulations on Cryptocurrency – Turkey

Just a few short years ago very few people had heard of, let alone used cryptocurrencies like Bitcoin. These days it’s fairly commonplace to have crypto as part of your investment portfolio. However, when you are planning to move to a new country, holding and using crypto currency becomes more complex.

If your plans include a move to Turkey, you might be wondering what the situation for crypto is there. So, let’s take a closer look at regulations on cryptocurrency in Turkey so you can make informed decisions.

Regulations on Cryptocurrency in Turkey

Until very recently (2020 in fact) Turkey was the world’s fourth highest user of cryptocurrencies. This was partly to allow investors the financial gains that this type of currency offers, and partly to lower their risk due to currency fluctuations.

However, in April 2021 things change dramatically. One of Turkey’s largest cryptocurrency exchanges collapsed many people lost a lot of money, and there were fraud charges brought against some of the individuals involved. To prevent people from losing money in this way in future. 

Turkish government also discovered that there were some bad actors using cryptocurrencies to conduct illicit activities.

It is for these two main reasons the Turkey decided to limit the use of crypto currency within its borders and enacted 2 new pieces of legislation.

These regulations on crypto currency in Turkey are:

• Regulation on the Disuse of Crypto Assets in Payments, enacted on April 30th, 2021
• Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism as amended by presidential decree in May

Effectively this changed the way that people could use crypto currency in Turkey. While you can still legally earn and own cryptocurrency as an investment, you are not legally allowed to use it to make a payment. There are also strict regulations on companies that sell and manage crypto currencies in Turkey.

Which means that while you won’t need to convert your crypto assets into currency, if you plan to move to Turkey or want to use crypto in Turkey, you will not be able to do so the same way you might at home.

Taxes on Crypto in Turkey

Crypto in Turkey is generally not subject to VAT. However, under the new regulations on cryptocurrency in Turkey, if the value of the assets you hold in crypto increases or appreciates by more than 19,000 in the local currency in 2021, you will be subject to income tax on those capital gains as you would for any other kind of capital gain.

There is also a draft law that has been before parliament in Turkey since October 2021. This law aims to make cryptocurrency holdings above a certain value taxable under Turkish law. The hope is to prevent people from using cryptocurrency as a method of laundering funds or tax evasion.

For more detail about taxation framework in Turkey. 

Payment with Crypto in Turkey

As we have already mentioned payment with crypto in Turkey is not allowed under current regulations on crypto currency in Turkey. The reason for this is partially because of the collapse of the local cryptocurrency exchange in 2021, but also because cryptocurrency transactions are not traceable in the same way that ordinary bank transactions are.

This means that the government is unable to verify the reason behind these transactions even if they are aware that they have been made. Which means that until now payments with cryptocurrency have sometimes been used to fund criminal or terrorist activities. So, the government of Turkey has clamped down to prevent this from happening.

In Summary

The laws and regulations on cryptocurrency in Turkey are changing fairly rapidly. Most of these laws and regulations are in reaction to misuse of this kind of currency by a handful of people. However, it does mean but even as a legitimate owner of cryptocurrency investments, there will be complications in owning and using them if you are in Turkey.

This is also an evolving situation, with new laws and regulations being added to the mix from time to time. So, there is no guarantee that the current regulations on cryptocurrency in Turkey will remain in place indefinitely.

Which means if you are planning to move to Turkey or to spend part of your time in that country, this will need to be factored into the equation. You will need to make sure what the regulations are before you make your move, and if you choose to continue to hold cryptocurrency assets while in Turkey, you will need to know the limitations that apply.

Laws surrounding cryptocurrencies are changing around the world all the time. So, this applies in any country that you might decide to visit or live in. It’s always best to check what the laws are immediately before you arrive, so you can stay on the right side of the law.

Make sure that any cryptocurrency you own is above board, and keep track of any earnings related to your crypto investments. As the tax laws in Turkey change and new regulations on cryptocurrency in Turkey added, you are likely to have to declare both the value of your crypto investments, and your capital gains on them.