Türkiye Crypto: SPK Regulation & Adoption #7

Bitcoin and cryptocurrency trading in Türkiye

Türkiye has a buzzing crypto economy but now it is illegal to spend your crypto gains on goods or services. The formal reason is due to definitions – the crypto asset is seen as an asset, not a currency, so it can’t be used as a payment – this is the official stand, but it’s also a great way of keeping the lid on the crypto economy while so much crypto confusion reigns.

Turkish Bitcoin trading and crypto law 

Cryptocurrencies are not accepted as currencies in Türkiye, and now the country has put in place legislation banning the use of cryptocurrency for the payment of goods and services – much the same as in Russia. This doesn’t mean that Türkiye isn’t a burgeoning crypto economy, though, because it is – the population has taken crypto to heart, and purchasing cryptocurrency as an investment is perfectly legal. So you can save it but not spend it – at least not in Turkey – which makes it a hoarder’s dream. All the leading exchanges operate, and there are plenty of ATMs where you can exchange your coins.

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Turkish Bitcoin mining

Mining is legal in Türkiye, but as we all know, it requires vast energy and massive computing power. In many countries, the cost is prohibitive, but when Bitcoin prices rise, so does mining activity. In Turkey, no specific law addresses cryptocurrency trading or mining. New tax laws applying to crypto taxation are sure to apply to mining, so watch this space.

Bitcoin tax in Türkiye

Türkiye follows the pattern of many countries with large populations that have readily adopted cryptocurrency. Much activity is peer-to-peer; specific taxation policies must catch up to widespread adoption. As such, crypto trading has not been subject to particular taxation measures, but this is due to imminent change. Exchanges and crypto service providers fall within the standard 20% tax for businesses, but a new tax policy surrounding the purchase and trading of crypto assets is underway.

In addition to standard income tax that may apply to your crypto income, there is also the possibility of Value Added Tax as trading may be deemed a performance and sale of services. In this case, your liability could be 5% VAT on the revenue unless the monthly sales amount is within $1,300

The latest ban on crypto spending and the potential arrival of new tax laws means it’s difficult to see how using cryptocurrency for long-term investment plans will play out.

Türkiye’s financial outlook on Bitcoin and the crypto economy

To a lesser or greater extent, all central banks worldwide are attracted to the idea of a central bank digital currency. This is not quite the same as trading popular cryptocurrencies such as bitcoin, but a means to have a controlled coin to facilitate cashless transactions without massive price speculations. In line with this, Turkey’s central bank has an R&D project underway to explore the concept of digital money. Having a ban on using cryptocurrency for spending instead inhibits mainstream banks from exploring opportunities to provide more comprehensive services; they can facilitate the transfer of funds to and from cryptocurrency exchanges on behalf of their customers.

Türkiye and Defi: the latest developments

As with all the countries dealing with cryptocurrency – even those that have banned it – Turkey is highly interested in the potential of blockchain technology. Turkey’s interest in blockchain is widespread and could be said to be one of the countries at the forefront of exploring its potential. One initiative, the Blockchain Turkey Platform, has the scope of creating a viable blockchain ecosystem throughout Turkey and helping the country take a lead in its development. Blockchain student communities have been established in many universities in Turkey. Young people are carrying out essential work on this issue. As with all countries, decentralized Finance (Defi) is a topic of debate. Whether Defi will replace the mainstream ebb and flow of financial systems is the biggest issue.