Written by: Bright, Foresight News
On July 5, according to Financefeeds, Turkey's 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 the once fourth largest cryptocurrency market in the world with nearly $200 billion in trading volume and the legalization of cryptocurrency, Turkey has tightened its grip on the crypto market once again.
Starting from March 2025, the Capital Markets Board (CMB) began comprehensive regulation of cryptocurrency service providers operating in Turkey and established a new licensing and compliance framework. At the same time, the anti-money laundering regulations for cryptocurrencies issued by the Turkish government in December 2024 have been formally implemented as of February. When users execute cryptocurrency transactions exceeding 15,000 Turkish lira (approximately $425), they are required to submit complete identity information to the service provider. Additionally, wallet addresses not registered on the platform are also subject to strict regulation, and there are many restrictions on using native cryptocurrency functions.
A stone tossed to test the waters under high inflation
On March 19, 2025, Ekrem Imamoglu, the mayor of Istanbul and a rival of President Erdogan, was arrested, triggering panic among local investors, and the Turkish lira (TRY) plummeted by 10% around 4 PM, reaching a new historical low of 41:1 (TRY:USD). About an hour later, a flight to safety into cryptocurrencies occurred in the market, with BTC/TRY trading volume on Binance surging dramatically.
In fact, under Turkey's 'Erdoganomics'—where low interest rates stimulate investment and currency devaluation promotes exports— the Turkish lira has depreciated dramatically by over 80% in five years; extreme inflation and capital flight have repeatedly hit the Turkish economy hard. In this regard, The Economist commented: 'He (Erdogan) is trying to treat cancer with steroids.'
In response, Turkish society has long had a strategy, namely 'gold under the mattress.' In the third quarter of 2024, according to estimates from the Turkish central bank, Turkish households hold physical gold worth over $311 billion, whereas the Turkish central bank has only $86.5 billion in gold reserves. From January to April 2025, Turkey's current account deficit was $20.3 billion, compared to $14.5 billion a year earlier, of which $6.27 billion can be attributed to gold trade. This gold disappears into private households once it flows into Turkey, no longer circulating.
Since 2022, apart from gold, Turkish investors have rapidly turned to cryptocurrencies in search of more stable and convenient value storage methods. Although Bitcoin fell into a bear market in 2022 due to factors such as the Fed's interest rate hikes and the FTX collapse, plummeting 64% for the year, Turkish investors, discovering a new frontier, remained very active in the crypto market. DOGE became one of the most popular trading assets in Turkey, with its trading volume even surpassing the combined total of BTC and ETH, reaching $380 million between October and November 2022. 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 also joined the wave of promoting widespread use of cryptocurrencies to escape dependence on external economies and SWIFT, seeking autonomy and stability in the financial system.
Embracing EU compliance but has become outdated
The background of Turkey's proposal to legalize cryptocurrencies is complex and diverse. On one hand, the rapid growth of the cryptocurrency market and global regulatory trends compel Turkey to face the legitimacy and regulatory issues of this emerging financial tool. 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 for convenient financial services.
The Turkish government announced on December 25, 2024, clarifying the main provisions of the new anti-money laundering regulations, focusing on transaction threshold setting, risk transaction handling, and restrictions on unregistered wallets, striving to enhance the transparency and security of cryptocurrency transactions.
The introduction of this regulation coincides with the European Market in Crypto Assets Regulation (MiCA) coming into effect on December 30, 2024. MiCA is seen as the world's first comprehensive regulatory framework covering crypto assets. It details regulations on the issuance of crypto assets, authorization of service providers, operation, reserve and redemption management, as well as anti-money laundering (AML) supervision. Furthermore, MiCA integrates the travel rules from the Transfer of Funds Regulation (TFR), requiring Crypto Asset Service Providers (CASP) to include sender and receiver information with each transfer to enhance traceability.
Turkey's regulatory provisions are all directly copied. However, as the U.S. gradually becomes a high ground for crypto compliance, continuously 'loosening' regulations for the crypto industry, Turkey's compliance process has evidently been lagging behind historical trends.
At least regarding the application of stablecoins, Turkey has not shown any signs of 'loosening' to date. Since 2021, the Turkish government has recognized the trading attributes of cryptocurrencies, but the use of cryptocurrencies as payment tools has been consistently 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 has not imposed taxes on profits from cryptocurrency assets but only levies a transaction tax of 0.03%, which is quite friendly to traders.
In summary, like countries such as Argentina with rapidly depreciating fiat currencies, Turkey's focus on cryptocurrencies remains primarily on hedging against fiat currency devaluation risks. Turkish residents' demand for cryptocurrencies is largely about exchanging visibly depreciating lira for stablecoins pegged to the dollar. After all, Turkey's central bank has negative foreign exchange reserves. Compared to the high fees and low security of traditional black markets, on-chain stablecoins with high liquidity have become the preferred means of value storage. In contrast to Turkey's traditional 'gold under the mattress' reserves, 'stablecoins under the pillow' are also becoming increasingly popular. The extensive arrangements made by Tron in payments and exchanges in Turkey are enough to illustrate the broad market demand.
However, Turkey has not yet become an innovative hub for the application of stablecoin cross-border payments and stock tokenization.
