Turkey has announced it will not implement new taxes on stock market and cryptocurrency investments in 2024. Vice President Cevdet Yilmaz confirmed this decision after earlier discussions about taxing profits from stock trading were dropped following a public backlash.

Yilmaz emphasized that a stock tax is no longer on the government’s agenda, adding that the proposal was previously considered but has now been set aside. Treasury and Finance Minister Mehmet Simsek had hinted earlier this year that the tax might be postponed due to investors’ concerns.

Investor concerns eased as plans Ddop

The government’s decision to backtrack on its tax plans is expected to reassure investors, especially those involved in the stock market and cryptocurrency sectors. Recent months have seen a decline in trading activity on the Istanbul Stock Exchange, with daily volume falling to $2.3 billion in the past month, a drop from over $4 billion earlier this year. Many investors in Turkey have been using the stock market and crypto assets as a hedge against the country’s soaring inflation, which currently stands at 52%.

Turkey’s efforts to combat inflation remain a priority, with officials focusing on narrowing tax exemptions rather than imposing new taxes. The country faces fiscal challenges due to recent earthquakes and pre-election spending, prompting the government to adopt a cautious approach to its economic policies.

Stablecoin and Cryptocurrency trading surge

Despite the absence of new taxes, Turkey remains one of the most active cryptocurrency markets globally. Between July 2023 and June 2024, the country processed approximately $136.8 billion in crypto transactions, making it the most prominent crypto market in the Middle East and North Africa (MENA) region and the seventh-largest in the world.

Stablecoins, in particular, have become a favored asset among Turkish investors, with nearly $6 billion in stablecoin purchases made using the Turkish lira in March 2024. The Turkish population is increasingly turning to crypto as an alternative to traditional banking, with around 40% to 50% of the population engaged in crypto activities.

Regulatory developments in Turkey’s Crypto market

Turkey is also making progress in regulating the cryptocurrency industry. Recent amendments to the Capital Markets Law now include cryptos, aiming to set standards for crypto asset service providers (CASPs). Draft legislation is being developed to impose additional requirements on CASPs, further integrating cryptocurrency into the country’s financial system.

The Central Bank of Turkey has taken a mixed stance on crypto. While it has banned using cryptocurrencies for payments, it allows banks to engage with CASPs for fiat-to-crypto transactions. 

Traditional financial institutions, such as Garanti BBVA, are beginning to offer crypto-related services, including custody and trading. As Turkey continues to navigate its economic challenges, its decision to drop new tax plans on stocks and crypto will likely relieve many investors while maintaining its commitment to economic reform and regulation.

The post Turkey Halts Plans for New Taxes on Stocks and Crypto Investments first appeared on Coinfea.