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On May 16, the Turkish Parliament is presented with a bill that would provide a comprehensive regulatory framework for cryptoassets – a move that participants in the local crypto industry have been eagerly awaiting.
The draft law is designed to provide Turkey’s Capital Markets Board (CMB), Turkey’s financial supervisory agency, with adequate powers to supervise virtual asset service providers (VASPs) operating in the country. VASPs will be required to obtain a license from the CMB before operating in the country and the CMB will be empowered to conduct surveillance visits to VASPs to ensure their compliance with key Anti-Money Laundering and Anti-Terrorist Financing (AML/CFT) requirements. , market conduct, consumer protection and other requirements.
Although the bill still needs to be debated in the Turkish parliament, it is expected to be passed eventually, as its adoption is considered an important step to ensure Turkey’s removal from the so-called “Gray List” maintained by the Financial Action Task Force (FATF), which identifies countries that do not meet global AML/CFT standards. The law, when passed, will equip Turkey with a regulatory framework that is more in line with that of countries in the nearby European Union (EU), and could allow the country to position itself as a hub for crypto innovation in the region alongside the United Arab Emirates, which already has regulation. through the framework established in Dubai and Abu Dhabi.
Indeed, the Turkish government was active throwing the country as a promising destination that hopes to attract investment from the crypto and Web3 industries. The formal presentation of his cryptoregulation bill could prove to be the first step in making that vision a reality.
US Congress backs repeal of SEC custody policy over Biden’s veto
US House of Representatives has voted to reverse a controversial policy stance taken by the Securities and Exchange Commission (SEC) under President Joe Biden.
On May 8, the majority of the US House of Representatives voted in favor of Resolution 109 HJ – a measure condemning and calling for the reversal of the SEC’s decision Staff Accounting Bulletin 121 (SAB 121). Published in April 2022, in SAB 121, the SEC indicated that when banks hold cryptocurrencies, they should be shown as a liability on their balance sheet for accounting purposes. The policy, articulated as guidance to SEC staff rather than formal rulemaking, could cause U.S. banks that hold cryptocurrencies to suffer significant losses — and many in the financial services industry have indicated that this position makes it undesirable for banks to directly handle cryptocurrency, potentially hindering innovation.
Opponents of SAB 121 — which includes the crypto industry, financial institutions and many Republican members of the US Congress — argue that the SEC should not have adopted such a sweeping and consequential policy without first engaging in formal rulemaking. Furthermore, they argue that the policy reflects the general anti-crypto stance taken by SEC Chairman Gary Gensler, who has advocated an aggressive enforcement policy toward suspected non-compliance in the crypto space. Resolution HJ 109, if passed, would invalidate SAB 121 and prevent the SEC from taking similar further actions in the future.
However, it remains very uncertain whether the resolution of the House will be adopted. To pass, the House version of the Resolution must be voted on by the US Senate and then signed by the President. In the Senate, the SEC has important and powerful backers among crypto-skeptical members of the Democratic Party, such as Sens. Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, who could stand in the way of a resolution.
In addition, President Biden said ua statement that he will veto any resolution that reaches his desk seeking to overturn SAB 121 — arguing that the rule is critical to protecting consumers from crypto-asset-related losses.
US house passes FIT 21 in sign of hope for crypto industry
Crypto asset advocates in the United States scored perhaps their most important legislative victory to date with the passage of a bill in the US House of Representatives that would provide the US with a comprehensive regulatory framework for cryptocurrencies.
On May 22, the House passed “The Law on Financial Innovation and Technology for the 21st Century” – also known as FIT21. The bill contains a number of provisions aimed at addressing the currently fragmented US regulatory environment for cryptocurrencies and would pave the way for more coherent oversight of the sector. Key provisions and features of the law include:
- consumer protection measures, such as requiring crypto market participants to provide enhanced disclosures and segregation of customer funds from their own assets;
- providing clarity on the definition of when a crypto-asset is a security or commodity, and therefore whether any related activity falls within the jurisdiction of the US Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC);
- defining terms such as “decentralization” to enable more efficient determination of the regulatory status of a particular project;
- creating clearer and simpler processes for registration with the SEC and CFTC.
The crypto industry has generally hailed the House’s passage of FIT21 as an indication that there is appetite among both parties in Congress for innovation-friendly regulation that would help the US – which today is seen as having a difficult-to-enforce approach to regulation – to remain competitive with jurisdictions such as the European Union, where comprehensive cryptocurrency regulation is set to come into effect this year. The Blockchain Association – a US-based industry advocacy group – called his passing “watershed moment”. In particular, the crypto industry has pushed for the bill’s attempt to carve out a larger role for the CFTC in overseeing the crypto spot market — which the industry believes could reverse the current trend of regulation through enforcement toward the crypto industry that is largely led by the SEC.
While the bipartisan passage of FIT21 in the House of Representatives is certainly an important sign that a bipartisan agreement on comprehensive cryptocurrency legislation is achievable, it faces important hurdles to becoming law. Although President Joe Biden has not threatened to veto the bill – as he announced he would in a separate case involving Congress overturning the SEC crypto accounting rule – SEC Chairman Gary Gensler was open opposed the bill, arguing that it would diminish the SEC’s ability to protect American consumers from fraud and abuse in the crypto markets. Gensler has important allies in the US Senate, including crypto-skeptic senators such as Elizabeth Warren of Massachusetts, who could block the bill’s passage — a prospect that was always seen as a long shot in an election year.
Some observers have also warned that the crypto industry should be careful what it wishes for – arguing that FIT21 would impose a number of new compliance requirements on crypto firms that would be challenging and expensive to comply with.
However, whatever the fate of FIT21, its passage in the US House does show that the future of crypto regulation is a topic rising on the US political agenda.
The US Treasury is weighing crypto risks in its latest illicit finance strategy
The U.S. Treasury Department considers cryptocurrencies a top policy issue when it comes to combating illegal activity, according to a new report.
On May 16, the Treasury issued its National strategy for combating the financing of terrorism and other illegal activities in 2024, in which he outlined his plans to combat financial crimes, such as money laundering, terrorist financing and sanctions evasion. Cryptoassets receive significant attention throughout the report, and the strategy includes an entire drive dedicated to addressing the illicit financial risks associated with cryptocurrency. According to the Treasury, between now and 2026, it intends to focus on the ways in which the US regulatory framework should be adapted to keep pace with the changing innovations in the crypto space. This will include:
- Monitoring developments in the DeFi space and considering how the regulatory perimeter may need to evolve in response to DeFi;
- Ensure that US legal and regulatory frameworks contain adequate provisions to deal with financial crime risks involving stable currency arrangements;
- Ensuring that key Treasury offices such as the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) are adequately resourced to oversee the VASP sector; and
- Increasing use of regulatory measures to enforce AM/CFT and crypto-asset sanctions compliance violations.
Some crypto companies are leaving Hong Kong as the regulatory deadline looms
Facing a June 1 deadline to register with regulators, a number of prominent crypto exchanges have withdrawn their applications to set up shop in Hong Kong – raising new questions about whether Hong Kong will prove to be the hub for crypto innovation that some hoped.
May 27 reports emerged which shows that crypto exchanges OKX, Gate.io, KuCoin, Binance and HTX have withdrawn their Virtual Asset Trading Platform (VATP) license applications from the local regulator, the Securities and Futures Commission (SFC). From June 1, all VATPs wishing to do business in Hong Kong must cease trading unless they receive approval from the SFC. So far, only two local firms have been approved to operate under Hong Kong’s regulatory framework, while another 18 are awaiting approval.
While the SFC is expected to approve further applications within the deadline or grant extensions for those still under consideration, the relatively small number of applications and the SFC’s slow approval rate have some observers concerned question whether Hong Kong will live up to its reputation as a hub for crypto innovation. When Hong Kong announced its plans for a VAPT regulatory framework last year, many in the crypto industry saw it as an indication that Hong Kong intended to introduce clear and comprehensive regulations that could facilitate local innovation – and that could allow Hong Kong to serve as a hub for the sector within the APAC region.
The decision by some crypto firms to withdraw their applications from consideration suggests that the reality of complying with the new regulations may prove more challenging and expensive than some in the industry initially expected.
Brazil pledges to advance cryptocurrencies by the end of the year
Brazil’s central bank has said it will begin phasing in a crypto regulatory framework before the end of the year – a hopeful sign that clear rules for cryptocurrencies could be on the way for South America’s largest economy. According to reports, the central bank intends to conduct consultations on cryptoassets before the end of the year, which will set a proposal for a regulatory framework for the regulation of VASP. The central bank will also set up a proposed framework for the supervision of arrangements with stable currencies.
Many crypto watchers have viewed Brazil as a potential hub of crypto activity in the region given the size of its economy – but regulation has been slow to arrive there. Even if the central bank manages to start introducing the regulation before the end of the year, it would mean a delay, given that it originally promised to introduce it in June this year.
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