CMB Principle Decisions Shape the Crypto Ecosystem

The principle decision published by the Capital Markets Board (CMB) on September 19, 2024 brought serious changes to the crypto asset ecosystem. These decisions, which will have radical effects on crypto asset service providers and users in Turkey, are considered the beginning of a new era in the sector.

Separation of Platforms and Customer Assets

Platforms were required to separate customer assets (currency, crypto assets, etc.) from the platform’s own assets.

This regulation requires that customer assets be kept in separate bank accounts from platform assets and that these accounts belong solely to the customer. Platforms are also prohibited from receiving or giving cash in person. All transfers must be made only through banks or authorized institutions.

Platforms Banned from Multitasking

Some platforms offered other trading features in addition to the cryptocurrency exchange function on the same platform.

During the process, the CMB was conveying to the platform authorities in bilateral talks that this activity was not appropriate. We had also witnessed some platforms separating their practices. With the new principle decision, this has also reached a standard.

NFT and Utility Token Issuance

The CMB excluded NFTs (Qualified Intellectual Property Titles) and “utility tokens” produced for games from the scope of the Law.

This step is considered a development parallel to regulations around the world. Platforms must report this to the CMB when they sell NFT or utility tokens. In addition, a warning must be placed on the platforms stating that these assets are not considered securities.

Closure of P2P Marketplaces

One of the most notable regulations was the requirement that peer-to-peer (P2P) marketplaces be closed by November 8, 2024.

Transactions made in these places are considered unauthorized crypto asset service providers. If the platforms do not cease their operations by this date, they could face serious sanctions.

Cryptocurrency Exchange Offices Are Closing Down

As I criticized in my previous Coindesk article, ATMs were closed, but the real transaction volume was in crypto exchange offices.

Cryptocurrency exchange offices where on-ramp and off-ramp transactions are carried out in a physical environment are now also banned.

Leveraged Trading Ban

Another important regulation is the ban on leveraged trading and crypto asset lending.

Platforms will no longer be able to trade crypto assets that are not in their clients’ accounts. This also prevents platforms from lending or borrowing assets. Platforms have been given a transition period to close existing open positions.

Promotion and Advertisement of Platforms

Platforms will not be able to make misleading advertisements that guarantee customers absolute returns or losses.

Promotional campaigns and customer acquisition activities have also been greatly limited. Such promotions must be terminated by October 4, 2024. This regulation, which ends affiliate marketing for now, has caused a huge reaction in the market.

The elimination of this model, which is one of the important sources of income for Finfluencers, has been criticized.

Tokenization of Real World Assets

The principle decision also gave a yellow light to the issue of crypto-assetization (tokenization) of real-world assets.

However, the purchase and sale of crypto-enriched assets will not be possible without the necessary infrastructure and reserve proof mechanisms. In addition, tokenizations made on issues that are not within the scope of the CMB will need to be in compliance with the relevant legislation. Therefore, the process will become much more complicated.

These regulations aim to increase security and ensure market order in the crypto asset ecosystem in Turkey. However, the resolution of some uncertainties in the sector and the effects of the ban on P2P transactions and leveraged transactions in particular will be more clearly understood over time. A critical period is beginning for platforms and users; compliance with new regulations will shape the future of the sector in the long term.