CMB’s Regulations on Crypto Asset Platforms
Introduction
Crypto assets have become a significant component of financial markets in recent years, prompting the development of a regulatory framework in response to growing investor interest. In this context, both the amendments to Capital Markets Law No. 6362 (“CML”) and various resolutions issued by the Capital Markets Board (“CMB”) in 2024 introduced key regulations governing the operation of crypto-asset platforms. These new regulations cover a wide range of aspects, including the establishment requirements for platforms, the protection of customer assets, advertising restrictions, and the qualifications of platform managers. This article explores the CMB’s new regulations.
Platform Establishment Conditions and Capital Structure
As defined in the CML, crypto assets are described as “intangible assets that can be created and stored electronically using distributed ledger technology or a similar technology, distributed over digital networks, and capable of representing value or rights”. Under the scope of the CML, a platform is defined as “an organization where one or more of the following transactions are conducted: crypto asset trading, initial sale or distribution, clearing, settlement, transfer, custody, and other transactions that may be determined”. Article 35/B of the CML stipulates that the CMB shall regulate the procedures and principles concerning the purchase and sale, initial sale or distribution, clearing, transfer, and laundering of crypto assets through platforms.
With Resolution No. 42/1259 dated 8 August 2024 (“Resolution No. 42/1259”), the CMB established the minimum capital requirement for establishing crypto asset platforms and mandated that platforms adopt a joint stock company structure. Accordingly, platforms must have a minimum capital of TRY 50,000,000, with all shares issued in cash. Furthermore, all shares must be registered, the trade names of the platforms must include the phrase “crypto asset trading platform” to reflect the services provided, and the articles of association must be exclusively structured for the execution of one or more of the following: crypto asset trading, initial sale or distribution, clearing, transfer, and custody transactions. The shareholding structure must also be transparent and publicly accessible. Additionally, the board of directors must consist of at least three members.
Conditions for Platform Founders, Shareholders and Managers
Resolution No. 42/1259 outlines various criteria for the founders, shareholders, and management of crypto asset platforms. Specifically, platform founders and shareholders:
- Must not be bankrupt, have declared concordat, or have a restructuring application approved through reconciliation.
- Should not directly or indirectly own or control 10% or more of the shares in banks under liquidation, factoring companies, financial leasing, financing, savings finance, asset management, insurance, reinsurance, pension companies, payment system operators, payment service providers, and institutions operating in money and capital markets whose operating licenses have been revoked (except for voluntary liquidation).
- Must not be prohibited from trading under Article 101 of the CML.
- Must not have been convicted of serious crimes, including disgraceful crimes, financing of terrorism, tax evasion, and crimes against state security.
Furthermore, individuals who have the right to receive more than half of the distributable profit of the platforms alone or who have the right to be represented on the board of directors by electing or nominating more than half of the board members by the company's articles of association must also meet these specified conditions.
Regulations on the Custody of Crypto Assets
The CMB's Resolution dated 19.09.2024 and numbered 1484 (“Resolution”) introduces various provisions regarding the custody of crypto assets. Under Article 35/C of the CML, it is stipulated that crypto assets belonging to platform clients must primarily be kept in the clients’ wallets. If clients choose not to store their crypto assets in their own wallets, custody services must be provided by banks or institutions authorized by the relevant authorities to offer them. Additionally, clients’ cash must be held in banks. Client cash and crypto assets must be kept separate from the assets of crypto service providers. Under Article 46 of the CML, client cash held with banks must be monitored in a separate account explicitly opened for platform clients, distinct from the platform's own cash assets. The Principle Decision further specifies that accounts opened on behalf of clients must be identified as belonging to the respective platform clients, and platforms are prohibited from receiving client cash in hand, delivering it to clients in hand, or storing it within the platform in any form.
Client Orders
The Resolution specifies that client orders may only be received through the platform's official website, mobile application, or registered telephone lines. This restriction, which prohibits using social media channels such as WhatsApp and Telegram, aims to ensure the secure and accurate retention of client order records. Platforms are required to establish an infrastructure that allows electronic log records and data to be kept in an electronic environment to reflect the date, time, and source of orders received through the website or mobile application, as well as voice recordings and logs related to orders received via phone. These records must be stored in a non-alterable and tamper-proof manner, with timestamped file integrity values, and the relevant data and records must be maintained by these principles as of 08.11.2024.
Crypto Asset Listing and NFTs
Under Article 35/C (2) of the CML, platforms are required to “establish a written listing procedure for determining which crypto assets can be traded, initially sold, or distributed on their platforms, as well as for terminating the trading of such assets”. However, the CML specifies that certain crypto assets are excluded from these listing principles. Specifically, Non-Fungible Tokens (NFTs) and assets used solely for creating or collateralizing various elements in virtual games are not subject to the listing requirements outlined in Article 35/C of the CML.
Advertising and Promotion Ban
Regarding the services platforms are authorized to provide, all postings, advertisements, and announcements made across written, visual, and electronic media, including print media, the internet, telephone, radio, television, cinema, outdoor advertisements, and printed materials, must be objective and non-misleading. Platforms are prohibited from making statements based on false or incomplete information or exploiting clients' lack of knowledge and experience. Additionally, statements promising absolute returns or guarantees against losses are not permitted except where expressly authorized by the legislation.
Concerning promotional campaigns conducted by platforms, organizing campaigns that guarantee clients a certain profit or encourage investments in specific crypto assets is prohibited. Likewise, promotional campaigns are not permitted to offer any material benefit or advantage to individuals who bring in new clients or clients referred by such individuals.
P2P (Peer-to-Peer) Transactions of Crypto Assets
In peer-to-peer (P2P) digital marketplaces that facilitate the direct purchase, sale, and exchange of crypto assets between users, conducting transactions in one's own name but on behalf of others as a regular occupation, commercial, or professional activity may be considered unauthorized crypto asset service provider activity. Individuals or entities engaging in such activities must cease their operations by 08.11.2024.
Conclusion
The CMB's resolutions published in 2024 take significant steps toward enhancing transparency, security, and the protection of investor rights in the crypto asset market. Notably, the requirement to safeguard client assets separately from platform holdings, the imposition of advertising and promotion bans, and the prevention of unauthorized activities are designed to strengthen market integrity. These decisions set forth essential frameworks for fostering a well-regulated and sustainable market environment within the crypto asset sector.
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