Turkey tightens requirements for user verification on cryptocurrency exchanges

Turkish authorities have obliged cryptocurrency exchanges to comply with anti-money laundering and countering the financing of terrorism (AML/CFT) rules. The decree by President Recep Tayyip Erdoğan was published in the Official Gazette, T.C. Resmî Gazete.

The document has already come into force. Under its scope fell fell under 31 cryptocurrency exchanges.

Representatives of trading platforms are required to request documents from users verifying identity and residence, and to periodically check their validity.

Exchanges must block customer accounts on sanction lists, report any suspicious activity, and inform regulators about services offered to institutional clients.

On 20 April the local Bitcoin exchange Thodex unexpectedly ceased trading, citing initially technical maintenance and then the transfer of the platform to a new partner. In the course of the investigation into the alleged exit scam detained 62 people.

The CEO of the company, Faruk Fatih Özer, was declared wanted. Later a court arrested six people connected with Thodex, including relatives of the platform’s head.

On 26 April the Turkish crypto exchange Vebitcoin ceased operations due to financial difficulties. Authorities blocked the platform’s accounts and arrested four people connected to the company.

Against this backdrop, the central bank said the Ministry of Finance would soon present regulatory rules for cryptocurrencies. Authorities also plan to establish a centralised custodian bank to mitigate the risk of counterparty insolvency in the digital asset space.

In April 2021, the Central Bank of Turkey banned the use of cryptocurrencies for payments for goods and services.

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