As Turkey's "Amendment to the Capital Market Law" officially came into effect in early July this year, it marked Turkey's entry into a new stage in the supervision of the crypto market. It not only provides a clear supervision framework for the local crypto market, but also provides a clear supervision framework for global crypto asset service providers. (CASPs) (i.e., virtual asset service providers VASPs) entered the Turkish market and opened up and guided a broad avenue.

Turkey’s licensing measure not only reflects the country’s government’s optimistic attitude towards the encryption industry, but also highlights Turkey’s strategic importance in the global cryptocurrency market. In the list published by the Turkish Capital Market Commission (CMB), the country’s regulatory agency, as of September 15, it can be seen that 76 companies are currently interested in conducting business locally in accordance with Turkey’s new regulations, including many leading international exchanges. Such as Binance, Coinbase, Crypto.com and Bitfinex, etc., highlighting the huge prospects of the Turkish crypto market.

This article will explore what is the magic power of Turkey and why it can attract international brands to flock in. More importantly, is there anything Taiwan can learn from Turkey’s supervision?

Türkiye moves to the forefront of active markets, new regulatory framework reaches new milestones

First, interest in and demand for alternative financial instruments such as crypto-assets has increased significantly in Turkey in recent years, driven by economic conditions and the high inflation of the Turkish lira. Cryptocurrencies have now become a popular way of saving and investing in Turkey. A large portion of Turkey’s population already holds crypto-assets or has experience in cryptocurrency trading, which has also fueled the growth of the number of local crypto-asset service providers.

At the same time, in the face of growing users and demand, the main challenges facing Turkish regulators are the need to combat money laundering and terrorist financing and protect investors. The country is working hard to create a friendly regulatory environment to ensure that consumers Protection and market transparency without discouraging crypto development. The "Amendment to the Capital Market Law" was passed and came into effect in such an atmosphere, and was widely praised by industry insiders.

However, although establishing a regulatory framework is a critical step, when the draft was first promulgated, it also caused heated discussions in the local crypto community: Does this mean that Turkish investors can only use local regulated trading platforms instead of Use an international exchange?

In this regard, Ömer Ileri, vice chairman of the ruling AK Party and the person in charge of the draft amendment, also came forward to clarify earlier. He emphasized that the bill does not prohibit Turkish residents from independently opening accounts and transactions on international exchanges. Its regulatory objectives are If international platforms want to conduct business in Turkey or target Turkish residents, they need to obtain approval from the regulatory authorities.

In short, Turkey’s regulatory model retains the right of Turkish residents to independently choose an international trading platform. However, if a platform operator intends to provide services to Turkish residents, it must be subject to mandatory supervision and regulation by the competent authorities.

From the information released by the Capital Markets Board of Turkey (CMB), we can see that many international exchanges, including Binance, have established entities in the country. For example, Binance has established Binance TR (Binance Turkey) to cope with the new regulations. After it comes into effect, how will international exchanges accept the supervision of the authorities, operate in the country, and provide localized services to local users?

From this point of view, this is undoubtedly a great boon to international trading platform operators. Turkey’s regulatory authorities have achieved a better balance in terms of compliance supervision, investor autonomy and protection, and the development of emerging technology industries. We also believe that international platform operators will benefit from such a clear and clear regulatory framework and are relatively With an open space, it can more effectively promote the development of local encryption industry and create more economic benefits.

Blockchain data analysis company Chainalysis pointed out in a report in September 2023 that between June 2022 and July 2023, Turkey’s total cryptocurrency transaction volume reached 170 billion U.S. dollars, second only to the United States and India. and the United Kingdom, rising to the forefront of the active global cryptocurrency market.

Turkish Finance Minister Mehmet Simsek said in January that local cryptocurrency legislation was nearing completion, but the expected draft has not yet been submitted to parliament. Although comprehensive legislation targeting cryptocurrency has not yet been completed, Turkey's cryptocurrency regulatory environment has gradually become clearer. The latest introduction of this framework not only strengthens supervision, but also provides guarantee for the healthy development of the cryptocurrency industry.

The Turkish authorities hope to use new regulations to enhance market trust and promote industry standardization, thereby attracting international companies to settle in, increase the country's competitiveness in the international market, and introduce more advanced technologies and services.

Hong Kong and Japan can learn from their mistakes. Should they embrace innovation or clamp down on development?

Looking back at the current development situation in the Asia-Pacific region, since the Hong Kong government announced the "Policy Declaration on the Development of Virtual Assets in Hong Kong", it has been determined to build Hong Kong into a Web 3 center. This move once made Hong Kong a hot spot for global cryptocurrency industry players, and new virtual assets The service provider licensing system came into effect earlier in June last year. However, as many international platforms such as OKX and Huobi HK have successively withdrawn their applications for Hong Kong licenses, the actual results of this measure have become clear to the public. To put it simply: there are many restrictions and high costs, making it difficult to attract international platforms to implement.

Hong Kong's "Ming Pao" quoted industry insiders as saying that the liquidity and tradable currencies of Hong Kong platforms are not as good as those overseas. After considering compliance and other costs, the platforms are not attractive enough to obtain a license to operate in Hong Kong.

On the other hand, the Japanese virtual asset market is relatively mature, and its regulatory system is often used as a reference for neighboring countries. However, the trend towards stricter regulations has actually led to the development of the Japanese encryption market being quite restricted in the past few years.

According to a report from Taiwan's "Xin Media", Japan's GMO Coin CEO Totaka Ishimura recently said when meeting with a delegation from the Taiwan Legislative Yuan and the Financial Supervisory Commission that Japan's virtual asset trading volume once accounted for about 30% of the world's, but due to too strict regulations, It has now dropped significantly to about 5%. He even pointed out, "This is a failure of Japanese supervision, and it has also scared away many foreign investments that were originally interested in landing in Japan."

It can be seen that whether it is the approach of Hong Kong or Japan, in terms of industrial development, there is still much room for further improvement and discussion in the future. However, it also provides Taiwan, as a latecomer in policy formulation, with an experience that can be carefully considered and learned from. .

Taiwan’s “registration system” is expected to be launched by the end of this year. Can it help the industry develop to a higher level?

Taiwan’s Legislative Yuan passed the amendment to the Money Laundering Prevention Act on the third reading in July this year, stipulating that virtual asset providers (VASPs) must complete registration before they can provide services. According to media quotes from officials, currently, if businesses that have completed compliance declarations are in Those who are still non-compliant after the buffer period will face withdrawal. As for the specific details of the "exit mechanism" and how to implement it, the Financial Supervisory Commission is still discussing it.

The difference before and after the amendment of the "Money Laundering Prevention and Control Act" is that under the original provisions, the Taiwan Financial Supervisory Commission adopted a "compliance statement" supervision method for virtual asset operators. To operate a virtual asset business, a "legal compliance statement" must be completed. However, the revised law Later, a "registration system" will be adopted to strengthen supervision. The biggest difference between the two is that the "Legal Compliance Statement" does not specify the specific qualification conditions for the industry; while the "Registration System" will specify the qualification conditions such as capital, information security, and personnel. In other words, the threshold for applicants will undoubtedly have higher standards and requirements than in the past.

Judging from the current situation of Taiwan's industry, it is an obvious fact within the industry that international trading platforms are the channel used by most investors. However, we have yet to see any international platform players appear on the list of the Financial Supervisory Commission's "Legal Compliance Statement", which may be detrimental to the implementation of investor protection and even the promotion of sound industry development.

Regulation has become a future trend. Can Taiwan proactively embrace the development opportunities of Web3?

In recent years, various countries have gradually increased their supervision of the encryption market. However, in terms of actual supervision practices, countries have different practical paths. Observing the current regulatory authorities around the world, there may be countries or regions that adopt relatively conservative or prohibitive approaches in dealing with cryptocurrency regulations. However, there are also countries like Turkey introduced in this article. The framework currently established by the authorities is relatively open and does not hinder While developing innovative businesses, we ensure that users and investors are highly protected.

It is not difficult to predict that Turkey’s application list may continue to increase in the future. It remains to be seen whether other countries will learn from this example to gain more cutting-edge international attention in emerging technology industries, attract international brands to land, and increase various investment opportunities. This will be of great significance to the vast number of countries. This is also good news for investors.

Across the world, more regulators have gradually realized the potential of the Web3 industry, such as Dubai. Therefore, in the policy formulation process, they are also actively trying to strike a balance between stabilizing financial order, implementing investor protection, and promoting industrial innovation. In the future, if Taiwan hopes to be able to attract high-quality international Web3 players to develop and invest in Taiwan like these countries with more cutting-edge regulations in order to activate the entire cryptocurrency industry, then the balance between the regulatory and operating environment is absolutely key.

How regulatory authorities can create a favorable legal environment for the development of cryptocurrencies, while improving legislation and improving people's financial knowledge, will help strengthen the market and improve its stability and security.

〈Türkiye’s new encryption regulations have been widely praised. Can Taiwan draw lessons from it to attract international brands to implement it? 〉This article was first published in "Block Guest".