In the Official Gazette dated 2 July 2024 and numbered 32590, the Law on Amendments to the Capital Markets Law No. 7518 ("Amendment Law") introduced additions concerning crypto assets to various articles of the Capital Markets Law No. 6362 ("CML"). Essentially, crypto asset service providers ("CASPs") operating or intending to operate in Türkiye were brought under the scope of the CML, thus subjecting them to the regulatory and supervisory authority of the Capital Markets Board ("CMB"). Following this, CMB published an announcement ("Announcement") on its website dated 2 July 2024 to outline the procedures that needs to be fulfilled by CASPs.
As the deadline for CASPs to submit their applications to the CMB in accordance with the Announcement has elapsed, the CMB issued a principle decision, numbered i-SPK.35.B (dated 08/08/2024 and numbered 42/1259) (“Principal Decision”) and published in its bulletin No. 2024/38 dated August 8, 2024, to provide guidance for the subsequent process. Accordingly, the principles regarding the establishment conditions of crypto asset platforms (“Platform”), their establishment procedures and the conditions that their shareholders and managers should meet within the scope of Article 35/B of the CML have been determined.
Conditions for the Establishment of Platforms
To obtain approval from the CMB for the establishment of a Platform, the following conditions should be met: The Platform should be established as a joint stock company,
The Platform should have a minimum paid-in capital of 50,000,000 (fifty million) Turkish Lira, with its equity capital not falling below this amount (it is noted that this amount may be increased by the CMB through other regulations that might be published in relation to the activities of Platforms),
All shares should be registered and issued against cash,
The founders should meet the conditions specified in the CML and related regulations,
The articles of association should comply with the provisions of the CML and other relevant regulations,
The articles of association should specify that the field of activity is exclusively the purchase, sale, initial offering or distribution, clearing, transfer, and custody of crypto assets, or one or more of these activities,
The trade name should include the phrase of "crypto asset trading platform" to reflect the services to be provided,
The board of directors should consist of at least 3 (three) members, and
The shareholding structure should be transparent and clear.
Conditions for Founders, Shareholders and Managers of Platforms
A provision outlining the conditions necessary for shareholders of Platforms was established by the Amendment Law. In addition to the conditions set forth in the Amendment Law, it is specified that Platform founders and shareholders should not be individuals who were responsible for incidents that led to the revocation of relevant capital markets institutions’ activity licenses by the CMB.
Managers are required to meet all conditions that are introduced for the shareholders, except for the financial strength condition. The “manager” concept and its scope has been clarified in Principal Decision. Accordingly, the “manager” shall refer to the members of the board of directors, the general manager, the deputy general manager and the personnel, regardless of their titles, who are equivalent to the general manager and the deputy general manager in terms of their powers and duties or who are authorized to represent the platform. In addition, the majority of the members of the board of directors will be required to have 4 (four)-year bachelor’s degree in addition to the other requirements set forth in the Amendment Law.
Establishment of Platforms
Founders are required to submit to the CMB the articles of association to be prepared in accordance with the conditions of incorporation, together with the documents showing that they and their managers meet the conditions specified in Principal Decision, and other documents and forms specified in Principal Decision. It should be noted that the application in question is for the establishment permit and that the relevant Platforms will also need to apply for an activity license in accordance with other principles and guidelines to be determined by the CMB.
Transition Process
Platforms that were operating as a CASP as of the Amendment Law's effective date are defined as “companies with customers and/or custody balances as of the application date.” The Principal Decision indicates that the applications of those who declared to the CMB that they had commenced operations in accordance with the Announcement but did not have customer or custody balances at the time of application, were not processed on the grounds that the requirements stipulated in the CML were not met. Additionally, applications from those who did not submit the Annex/2 Form included in the Announcement or who submitted incomplete or insufficient explanations and documents requested in items (3) and (4) of the document list in Annex/1 will not be taken into account for CMB’s review and thus be dismissed. If any documents other than those are incomplete, the missing information and/or documents should be completed and submitted to the CMB within 15 (fifteen) business days from the date of the CMB's request. In this case, these companies can be included into the "List of Operating Entities" prepared and announced in accordance with the Announcement. If the documents are not submitted within the requested scope and timeframe, the applications will not be taken into account for CMB’s review and thus be dismissed.
Those whose applications were not processed or were dismissed will not be permitted to engage in activities within the scope of the Platform definition under the CML after the CMB's notification. However, they may reapply by meeting the conditions specified in the Principal Decision.
Companies that have applied to the CMB pursuant to the Announcement and have been included into the "List of Operating Entities" on the CMB's website should submit the necessary information and documents to the CMB by 8 November 2024, in order to fulfil the conditions specified in the Principal Decision. If the documents are not submitted within the requested scope and timeframe, the applications will not be taken into account for CMB’s review and thus be dismissed. Companies on this list may continue their operations until the secondary CMB's regulations on activity conditions come into effect.
Non-compliance with the relevant regulations will be considered as unauthorized crypto asset service provider activities under the relevant articles of the CML and the provisions of the CML will be applied accordingly.
For further information on this matter, please contact us via info@sadikcapan.com
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