Turkey aims to shed FATF gray list status with new crypto regulations

November 1, 2023 Coin Telegraph

Finance Minister Simsek reportedly stated that the sole outstanding technical compliance matter is crypto assets.

Turkey is reportedly drafting fresh regulations to govern crypto-assets in an effort to convince the Financial Action Task Force (FATF), an international organization responsible for combating financial crimes, to remove it from a “gray list” of nations that have not done enough to combat money laundering and terrorist financing.

Notably, the FATF placed Turkey on its gray list in 2021. According to a report, during a discussion with a parliamentary commission on Oct. 31, Turkish Finance Minister Mehmet Simsek mentioned that a FATF report determined that Turkey adhered to all but one of the 40 standards set by the watchdog.

Finance Minister Simsek reportedly stated that the sole outstanding matter for technical compliance is related to crypto assets. He cited plans to propose a crypto-assets law to parliament, aiming to exit the gray list, pending any political factors. No specifics on the legal changes were provided.

The FATF, established by the G7 advanced economies to safeguard the international financial system, cautioned Turkey in 2019 about significant deficiencies. These included the necessity to enhance procedures for freezing assets associated with terrorism and the proliferation of weapons of mass destruction.

Nevertheless, the Turkish Presidential Annual Program for 2024, released on Oct. 25 in the Official Gazette of the Republic of Turkey, sets the objective of completing cryptocurrency regulations in the country by the end of 2024. Article 400.5, found within the comprehensive 500-page document, outlines the intended efforts to establish clear definitions for crypto assets, potentially subject to taxation in the future.

The document also intends to legally define crypto asset providers like cryptocurrency exchanges. However, it does not provide further specifics on the upcoming regulatory framework. By December 2022, the Central Bank of the Republic of Turkey had successfully conducted the initial trial of its digital currency, the digital lira. It has expressed intentions to pursue further testing into 2024.

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Turkey plans to craft crypto framework in 2024

October 27, 2023 Coin Telegraph

CBDC

Crypto asset providers, such as crypto exchanges, will also be given a legal definition.

The 2024 Turkish Presidential Annual Program, published on Oct. 25 in the Official Gazette of the Republic of Turkey, aims to finalize crypto regulations in the country within the calendar year of 2024.

Article 400.5 of the almost 500-page document reveals the planned studies to define crypto assets, which might be taxed appropriately afterward. Crypto asset providers, such as crypto exchanges, will also be given a legal definition. However, the document contains no other details on the future regulations.

In September 2023, the former CEO of Turkish crypto exchange Thodex, Faruk Fatih Özer, was sentenced to 11,196 years in prison by a Turkish court. Thodex, which was one of the largest trading platforms in the country, abruptly imploded in 2021.

According to a 2022 study, Turkey was the second nation in the world in terms of crypto-related search requests, with 5.5% of the population making them. The country saw an elevenfold rise in crypto use in 2021 amid the ongoing inflation crisis of the local fiat currency, the Turkish lira.

In December 2022, the Central Bank of the Republic of Turkey completed the first trial of its central bank digital currency, the digital lira, and has signaled plans to continue testing throughout 2024. And while the government has still made no commitment to the ultimate digitalization of the country’s currency, Turkish President Recep Tayyip Erdoğan has repeatedly supported the digital lira project.

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Court Hands 11,196-Year Prison Sentence to CEO of Exchange That Collapsed With $2,000,000,000+ in Crypto: Report

September 8, 2023 The Daily Hodl

Turkish crypto exchange Thodex CEO gets 11,000-year sentence for $2B scam: Report

September 8, 2023 Coin Telegraph

Turkish crypto exchange Thodex CEO gets 11,000-year sentence for B scam: Report

Coin Telegraph

The Thodex founder fled the country in 2021 only to be detained in Albania in August 2022 and extradited to Türkiye in April 2023.

The former CEO of Turkish crypto exchange Thodex, Faruk Fatih Özer, was sentenced to 11,196 years in prison by a Turkish court on charges of “establishing, managing and being a member of an organization,” “qualified fraud,” and “laundering of property values.”

The Anatolian 9th High Criminal Court sentenced Özer along with his two siblings to the same jail sentence of 11,196 years, 10 months and 15 days in prison along with a $5-million fine, reported Turkish state-run news agency Anadolu Agency.

The Turkish crypto exchange was one of the largest digital asset trading platforms in the country before it abruptly imploded in 2021. The exchange halted services on the platform without prior notice, and the founder, Özer, fled the country along with users’ assets totaling $2 billion in crypto. At the time, Özer had refuted all claims of a possible exit scam.

The fugitive founder was finally detained in Albania in August 2022, where he was serving a jail sentence, before he was extradited to Türkiye in April 2023 on charges of fraud and money laundering. Özer was already in jail for failure to submit tax documents since July, while the most recent conviction comes for defrauding customers.

The founder of the crypto exchange claimed in court that he and his family are facing injustice. He said Thodex was just a crypto company that went bankrupt and had no criminal intentions. A Google-translated version of Özer’s court statement read:

“I am smart enough to manage all institutions in the world. This is evident from the company I founded at the age of 22. If I were to establish a criminal organization, I would not act so amateurishly. What is in question is it is clear that the suspects in the file have been victims for more than 2 years.”

The long-drawn-out case against the Thodex crypto exchange had 21 defendants, five of whom attended the court hearing in person. The court acquitted 16 defendants of “qualified fraud” due to lack of evidence and ordered the release of four defendants. The other defendants in the case received varying degrees of sentences based on their involvement in the fraud.

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Thodex CEO sentenced to Turkish prison for failure to submit tax documents

July 18, 2023 Coin Telegraph

Coin Telegraph

Faruk Fatih Özer failed to submit the requested documents to the Tax Inspection Board. He denied being Thodex’s official at the time, which prevents him from presenting the requested books.

Three months after Faruk Fatih Özer — the founder and former CEO of Thodex — was detained in Türkiye, he received a prison sentence of seven months and 15 days for failing to submit documents requested during the trial.

Thodex was once one of the biggest crypto exchanges in Türkiye before it suddenly shut down and Özer fled to Albania. Following a Red Notice by Interpol, Özer was extradited back to Türkiye to be held responsible for the investors’ roughly $2 billion worth of cryptocurrencies.

While Özer maintained innocence throughout the trial since Oct. 30, 2021, he failed to submit the requested documents to the Tax Inspection Board. He denied being Thodex’s official at the time, which prevents him from presenting the requested books. He further claimed that a trustee had been appointed to run the business on his behalf during the said timeframe.

ÖNEMLİ DUYURU pic.twitter.com/3aBeJjFSYQ
— THODEX (@thodexofficial) April 22, 2021

As reported by Hürriyet Daily News, Özer’s prosecutor initially sought a five-year prison sentence for “smuggling” under the Tax Procedure Law. The court initially sentenced the crypto entrepreneur to one year and six months of imprisonment, which was later reduced to seven months and 15 days. The reasons for the sentence reduction include Özer's social relations, and overall behavior and conduct during the trial.

In addition to tax-related charges, Özer has also been accused of defrauding Thodex investors and awaits a hearing on the alleged accusations. The entrepreneur continues to deny the allegations, claiming that he has been framed by the defendants.

A recent study from Swedish crypto tax firm Divly shows that 99.5% of crypto investors did not pay taxes in 2022.

Crypto investors tax payment rate in 2022. *Source: Divly*

The report estimates that Finland has the highest proportion of crypto investors who paid the required taxes on crypto in 2022 at 4.09%, with Australia following closely behind with 3.65%.

However, the methodology used to arrive at the estimates remains questionable as the report notes that search volume data may not accurately reflect the actual number of crypto taxpayers, as not everyone who pays tax searches for crypto tax-related information online.

How could the Chinese economic crisis impact Bitcoin and crypto?

June 26, 2023 Coin Telegraph

Bitcoin Price

Cointelegraph analyst and writer Marcel Pechman explains how China’s economic weakness and Turkey’s interest rate hikes could impact the cryptocurrency market.

On the latest episode of Cointelegraph’s Macro Markets, analyst Marcel Pechman explores how Turkey’s recent interest rate increase might attract hundreds of millions of new cryptocurrency investors, and how China’s looming economic crisis could affect Bitcoin (BTC) and crypto globally.

Turkey’s central bank has increased the interest rate by 6.5% to 15% in a dramatic attempt to fight inflation. The move comes as the local currency, the lira, dropped by 80% against the United States dollar in five years.

According to Pechman, whether the U.S. dollar holds its dominant position as a global reserve currency doesn’t matter. Turkey and Argentina’s 70% inflation in 2022 are perfect examples of how decentralized cryptocurrencies might be the sole lifeguard for hundreds of millions — if not billions — of people who cannot save and transact in foreign currencies.

The next part of the show discusses whether China’s economic weakness impacts Bitcoin and how its central bank digital currency could increase demand for cryptocurrencies. Goldman Sachs economists reduced their estimates for Chinese gross domestic product growth to 5.4%, citing “challenges from the property market, pervasive pessimism among consumers and private entrepreneurs, and only moderate policy easing.“

Pechman shows how the iShares MSCI China exchange-traded fund has been a better proxy for Bitcoin’s price and explains the importance of the Chinese economy to global growth. Ultimately, for Pechman, if the Chinese stock market goes down, the odds are cryptocurrency prices will be pressured as well.

Lastly, Pechman presents a bullish case for cryptocurrency adoption during a recession — or lower growth, in China’s case — including stimulus checks being used to buy cryptocurrencies.

Macro Markets runs exclusively on the new Cointelegraph Markets & Research YouTube channel, so make sure to like and subscribe today!

Crypto adoption is booming, but not in the US or Europe — Bitcoin Builders 2023

May 18, 2023 Coin Telegraph

Coin Telegraph

At the Bitcoin Builders Conference, Daniel Fogg from IOV Labs and Rootstock spoke with Cointelegraph about how emerging markets are shaping the future of the crypto space.

Mass crypto adoption is already taking place around the world, but not in the United States or Europe, nor does it have Bitcoin as a flagship asset for mainstream acceptance. According to Daniel Fogg of smart contract platform Rootstock, the increase in adoption is instead ongoing in emerging markets, where cryptocurrencies are offering solutions to people’s everyday problems.

In an interview with Cointelegraph’s Joe Hall at the Bitcoin Builders Conference in Miami, Fogg spoke about Bitcoin pragmatism, adoption worldwide and how emerging economies are shaping the future of the crypto space.

*Joe Hall and Daniel Fogg at the Bitcoin Builders Conference 2023. Source: Cointelegraph*

According to Fogg, emerging markets are leading the way in crypto adoption for one major reason — countries that have significant macroeconomic challenges. In his view, many people’s first meaningful digital banking experience will be happening in emerging markets on crypto rails in the coming years.

“People on the streets have a pressing need to protect their income, to get access to U.S. dollars to get a loan. [...] We’re seeing these massive shifts. For me, if you want to look at the future of what I hope crypto will become, it exists today in Turkey, Colombia, Nigeria, Argentina. It doesn’t exist today in the United States or the U.K."

Fogg believes the crypto space is evolving through two major crypto use cases. One is centered around decentralized finance (DeFi) solutions for people seeking outsized returns and alternative investment opportunities. Another use case involves people acquiring stablecoins pegged to the U.S. dollar for savings and daily payments in economies dealing with inflation, devaluation and other monetary problems.

“I think there’s a kind of bifurcation in what DeFi could become, advanced DeFi, which is a lot of what I think the usage in America and Europe will be [...], and then everyday DeFi, which is what you’re going to see in emerging markets every day."

Emerging markets offer “scale opportunity” to retail finance, said Fogg, adding that developing DeFi products for these areas is a key strategy for Rootstock and its sister company, IOV Labs. Speaking about Bitcoin pragmatism, Fogg highlighted that although Bitcoin is a remarkable innovation, Bitcoin alone is simply not enough. As told by Fogg, the crypto space doesn’t yet have an established use case for billions of users, and it may take years to achieve that:

“In many cases, we think they’re paying, saving, borrowing, lending, retail finance, etc. But there are many other use cases as well. We have to experiment our way there. And if we are held back by a traditional conservative mindset around what Bitcoin could be, I think that’s to the world’s detriment."

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