(Initial License Application Deadline: 2^nd of August 2024)

The draft Law amending various articles of the Capital Markets Law No. 6362 (Law No. 6362) regarding the supervision and audit of the activities of cryptoasset service providers (CASPs) and their licensing process was adopted by the Grand National Assembly of Türkiye and published in the Official Gazette on 2^nd of July 2024. The amendments to Law No. 6362 entered into force as of the date of publication in the Official Gazette. Thus, all activities of CASPs are now subject to the Capital Markets Law No. 6362 and its related sub-regulations. The CASPs will continue their activities under the supervision of the Capital Markets Board (CMB).

The Law No. 6362 includes certain transitional provisions for service providers that have been carrying out cryptoasset activities as of the effective date of the amendments to Law No. 6362. The transitional provisions include provisions regarding the continuation or liquidation of the service providers that are already in operation. According to the first paragraph of Provisional Article 11 of the Law No. 6362;

With this provision, companies that provide cryptoasset services on the date of entry into force of the Law are obliged to make a declaration to the CMB within one month as of the date of entry into force of the Law. This mandatory declaration can be in the form of either of the two different alternatives:

First Alternative

A cryptoasset service provider may declare that “it will make the necessary applications to obtain an operating license by meeting the conditions stipulated in the secondary regulations to be issued by the Capital Markets Board.”

The CASPs that make such a declaration may continue their current activities. However, after the secondary regulations are published by the CMB, they are obliged to apply for an activity permit (license) to the CMB within the period specified in these regulations.

Pursuant to paragraph (7) of the provisional Article 11 of the Law No. 6362, secondary regulations must be prepared and put into force within six months following the entry into force of the Law.

Second Alternative

An operating cryptoasset service provider may declare that “it will take a liquidation decision within three months and will not accept new customers during the liquidation process.”

The board of directors of such a cryptoasset service provider is then obliged to take a liquidation decision within three months and not accept any new customers. After the liquidation decision is taken, the liquidation procedures of the company must be initiated and finalized in accordance with the provisions of the relevant legislation. It is essential that the rights and interests of customers are not harmed during the liquidation process.

Consequences of failure to fulfill the mandatory declaration obligation

The companies that continue their activities within one month from the date of entry into force of the Law and do not make a declaration that they will apply for a license or liquidate their activities after the secondary regulations are issued, commit the offense of operating without permission. The penalty for this is set forth in Article 109/A:

“Real persons and officials of legal entities that are found to operate as a cryptoasset service provider without authorization shall be sentenced to imprisonment from three to five years and a judicial fine from five thousand days to ten thousand days.”

The CMB is also authorized to take all kinds of legal measures for service providers operating without authorization.

Authors: Mehmet S. YURTÇİÇEK 

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