Written by: Bright, Foresight News
On July 5, it was reported by Financefeeds that the Turkish Capital Markets Board (CMB) has taken legal action to ban 46 cryptocurrency-related websites, including the decentralized exchange PancakeSwap. The reason given by the CMB is very simple: these platforms provide 'unauthorized cryptocurrency services' to Turkish residents.
As a once fourth-largest cryptocurrency market globally with annual trading volumes close to $200 billion, Turkey, where cryptocurrency trading has been legalized, has once again tightened the reins on the cryptocurrency market.
Starting from March 2025, the CMB began comprehensive regulation of cryptocurrency service providers operating in Turkey and established a new licensing and compliance framework accordingly. Meanwhile, the anti-money laundering regulations for cryptocurrencies issued by the Turkish government in December 2024 have also officially come into effect in February, requiring users to submit complete identity information to service providers when executing cryptocurrency transactions exceeding 15,000 Turkish lira (approximately $425). At the same time, wallet addresses not registered on platforms are also subjected to strict regulation, with significant restrictions on using native crypto functions.
A Stone's Throw in the Face of High Inflation
On March 19, 2025, Ekrem Imamoglu, the mayor of Istanbul and rival of President Erdogan, was arrested, triggering panic among local investors. The Turkish lira (TRY) plummeted by 10% around 4 PM, reaching a new historic low of 41:1 (TRY:USD). About an hour later, a flight to safety for fiat currencies occurred in the crypto market, causing a significant surge in BTC/TRY trading volume on Binance.
In fact, under Turkey's 'Erdoganomics'—which stimulates investment through low interest rates and promotes exports via currency depreciation—the Turkish lira has already depreciated more than 80% over five years; extreme inflation and the withdrawal of international capital have frequently hit the Turkish economy hard. In this regard, The Economist commented: 'He (Erdogan) is trying to treat cancer with stimulants.'
In response, Turkish society has actually long had a solution: 'gold under the mattress.' In the third quarter of 2024, according to estimates from the Turkish central bank, Turkish households possess physical gold worth over $311 billion, compared to only $86.5 billion in gold reserves held by the Turkish central bank. From January to April 2025, Turkey's current account deficit was $20.3 billion, whereas this figure was $14.5 billion a year ago, with $6.27 billion attributable to gold trade. This gold disappears into private households after flowing into Turkey and is no longer circulated.
Since 2022, apart from gold, Turkish investors have rapidly turned to cryptocurrency in search of a more stable and convenient way to store value. Although Bitcoin fell into a bear market in 2022 due to factors such as the Federal Reserve's interest rate hikes and the FTX collapse, dropping 64% for the year, Turkish investors, who are discovering a new frontier, remain very active in the crypto market. DOGE has become one of the most popular trading assets in the Turkish market, with its trading volume even surpassing the total of BTC and ETH from October to November 2022, reaching $380 million. Despite the Erdogan government warning the public to stay away from cryptocurrencies early on, local residents have already regarded cryptocurrencies as a tool against inflation.
Subsequently, Turkish authorities have also joined the tide of promoting the widespread use of cryptocurrencies to free themselves from dependence on external economies and SWIFT, seeking autonomy and stability in the financial system.
Embracing EU Compliance Yet Already Outdated
The background of Turkey's proposal for the legalization of cryptocurrencies is complex and diverse. On one hand, the rapid growth of the cryptocurrency market and the regulatory trends worldwide have forced Turkey to confront the legitimacy and regulatory issues of this emerging financial instrument. On the other hand, Turkey aims to enhance financial inclusion through cryptocurrencies, especially in areas lacking banking services, where financial tools like cryptocurrency debit cards can help users bypass traditional banking systems and achieve convenient financial services.
On December 25, 2024, the Turkish government announced the main provisions of the new anti-money laundering regulations, focusing on setting transaction thresholds, handling risky transactions, and restrictions on unregistered wallets, aiming to enhance the transparency and security of cryptocurrency transactions.
The introduction of this regulation coincides with the European (Cryptocurrency Market Regulation Act) (MiCA) coming into effect on December 30, 2024. MiCA is seen as the world's first comprehensive regulatory framework covering cryptocurrency assets. It provides detailed regulations on the issuance of cryptocurrency assets, the authorization of service providers, operational management, reserve and redemption management, as well as anti-money laundering (AML) regulations. Additionally, MiCA integrates the travel rule from the (Funds Transfer Regulation) (TFR), requiring cryptocurrency asset service providers (CASP) to include sender and receiver information in each transfer to enhance traceability.
Turkey's regulatory framework has been entirely copied. However, as the United States gradually becomes a high ground for crypto compliance and continues to 'loosen' regulations for the crypto industry, Turkey's compliance process has clearly lagged behind historical progress.
At least in terms of the application of stablecoins, Turkey has not yet shown any signs of 'loosening' since 2021. The Turkish government has recognized the trading attributes of cryptocurrencies, but the use of cryptocurrencies as payment tools has been prohibited. This means that while investors can trade freely, they cannot directly apply cryptocurrencies in daily consumption scenarios, and the trillion-dollar payment market for stablecoins remains on hold.
However, although the new regulations impose restrictions on certain trading activities, the Turkish government remains open regarding cryptocurrency tax policies. The Turkish government does not impose taxes on profits from crypto assets but only levies a 0.03% transaction tax, which is quite friendly for traders.
In summary, like Turkey and Argentina, which are countries experiencing rapid depreciation of their fiat currencies, the focus of cryptocurrency remains on hedging against the risk of fiat currency depreciation. The demand for cryptocurrencies among Turkish residents is more about converting visibly depreciating lira into on-chain stablecoins pegged to the dollar. After all, the foreign exchange reserves of the Turkish central bank have become negative. Compared to the high fees and low security of traditional black markets, on-chain high-liquidity stablecoins have become the preferred means of value storage. Compared with Turkey's traditional 'gold under the mattress' reserves, 'stablecoins under the pillow' have also started to gain popularity. The extensive layout of Tron in payments, exchanges, and other areas in Turkey is enough to illustrate the broad market demand in Turkey.
However, regarding the application of stablecoins for cross-border payments and stock tokenization, Turkey has yet to become a hub of innovation.
