Limitation on Promotional Campaigns Organized by Crypto Platforms

With the amendments made to the Capital Markets Law No. 6362 (“Law”), organizations where one or more of the crypto asset buying and selling, first sale or distribution, clearing, transfer, storage required thereof and other transactions that can be determined are carried out are defined as “platforms” within the scope of the Law. It was envisaged that the platforms, which were defined and also fall within the scope of the definition of crypto asset service provider, would engage in activities in accordance with the conditions to be stipulated in the secondary regulations to be issued by the Capital Markets Board (“Board”).

Although the secondary regulations issued by the Board, which is authorized to regulate crypto asset markets, are still in the process of being regulated, it would not be wrong to say that the Board has started to make its regulatory impact on the crypto sector strongly felt with the Principle Decision No. 1484 (“Principle Decision”) dated September 19, 2024. .

As it is known, advertising and marketing activities have a key place in the budgets and growth strategies of platforms operating both in Turkey and abroad, and promotional campaigns that provide direct financial benefits to users are frequently preferred. In order to increase the number of users who are members of the platform or to maintain the number of existing users; Providing direct financial benefits to users who are already members of the platform, users who are new members, potential members or people who refer potential members to register on the platform was a strategy adopted by many large and small platforms.

The Policy Decision broadly prohibited promotional campaigns that provide financial benefit to the people to whom they are directed, but the banning of an established practice that the market is accustomed to, without being discussed in the required detail and clarity by the Board, brought about some confusion and differences of interpretation. Namely, with respect to the promotional campaigns carried out by the platforms, the Board may not provide any information to persons who (i) promise a certain return to their customers or direct them to invest in one or more crypto assets, or (ii) bring customers to the platform by any method or the customers they bring in. It prohibits the organization of promotional campaigns that provide benefit or advantage without any additional explanation or provision.

Even though it is relatively clear that the Board has highlighted the practice of gaining members to the platforms through the reference persons method, also known as affiliate, and in return providing financial benefits to the references and the people who become members through the reference, some issues regarding providing benefits to existing users have created uncertainty. Namely, while it is prohibited to provide “any benefit or benefit” to the references and the people they make members of, the same words are not used for the people defined as customers and instead, it is prohibited to organize promotional campaigns containing “the promise of a certain return” for these people.

Considering that the terms used in legal technique have a very important place in the understanding and interpretation of certain obligations, questions such as why the Board preferred a different term in the first paragraph of a regulation consisting of only two paragraphs than the one used in the second paragraph and whether this was a conscious choice remained unanswered. . Because, there are differences of opinion as to whether the promise of return means directing users to invest in certain assets or providing direct financial benefit by stating that it is likely to make a profit when invested in some crypto assets, and future decisions and guidance from the Board on this issue are expected. .

In our opinion, the related uncertainty makes it difficult to compete at the national level with platforms operating abroad and hinders the development of platforms in the local market. Therefore, it would be healthy to immediately draw the framework of advertising and promotional activities in a way that does not cause any uncertainty. It should also be noted that some platforms appear to be continuing promotional campaigns that may be contrary to the Resolution. Considering that the risk perception on this issue varies depending on the size of the platforms and the unknownness of the Board’s approach to the issue, it would not be wrong to say that an unfair competitive environment has been created in the market in this respect.

It should be reminded that if activities contrary to the standards determined by the Board are detected; To be authorized to request from the relevant parties that the non-compliances be remedied within a period determined by the Board and to ensure compliance with the law, business objectives and principles, or to directly limit the scope of the activities of these institutions or temporarily suspend them, to revoke their powers completely or in respect of certain capital market activities, or to take any other measures it may prescribe. and the Board may temporarily or permanently cancel the licenses of managers and employees who are found to be responsible for illegal activities or transactions, limit their signature powers from the decision to file a criminal complaint against them until the trial is concluded, or The Board of Directors is authorized to remove members of the Board of Directors who are found to be responsible for unlawful acts or transactions carried out by a court decision, and to appoint new ones until the first general assembly meeting to be held.