Regulation on Not Using Crypto Assets in Payments

On April 16, 2021 by the Central Bank of the Republic of Turkey were published of the Regulation on the Crypto not be used in payment Assets (“Regulation”) on the Official Gazette.

With this Regulation, not to use crypto assets in payments, not to use crypto assets directly or indirectly in the provision of payment services and electronic money issuance, intermediation of payment and electronic money institutions to platforms that offer trading, custody, transfer or issuance services for crypto assets or transfers of funds from these platforms. It was aimed to determine the procedures and principles regarding the failure to do so.

Crypto asset in the implementation of the regulation; It refers to intangible assets that are created virtually using distributed ledger technology or a similar technology and distributed over digital networks, but are not qualified as fiat money, cash, electronic money, payment instrument, securities or other capital market instrument.

Although this definition of crypto assets is made only to be used in the implementation of this Regulation, it is seen that a framework showing the general approach to the legal nature of crypto assets has been created and they are considered as “intangible assets”.

According to the regulation, crypto assets cannot be used directly or indirectly for payments. No service will be provided for direct or indirect use of crypto assets in payments.

Payment service providers will not be able to develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance, and will not be able to provide any services related to such business models. Payment and electronic money institutions will not be able to intermediate the platforms that offer trading, custody, transfer or issuance services for crypto assets or fund transfers from these platforms.

The reason for this restriction imposed by the regulation is that crypto assets are not subject to any regulation and control mechanism, there is no central addressee, market values ​​show excessive volatility, can be used in illegal activities due to their anonymous structure, wallets can be stolen or used illegally without the knowledge of the owners, and the transactions are irreversible. shown to be. In addition, it was stated that the use of crypto assets in payments has the possibility of creating irreparable grievances for the parties of the transaction and includes elements that may create weaknesses in the methods and tools currently used in this field.

Payment institutions and electronic money institutions that cooperate with crypto asset platforms have been given a deadline until April 30 to stop their activities. The regulation will enter into force on April 30, 2021.

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