Turkey is gearing up to enforce tough cryptocurrency regulations starting in February 2025, aiming to strengthen its anti-money laundering (AML) measures and align with international standards. Inspired by the European Union's Markets in Crypto-Assets (MiCA) framework, these rules target the prevention of illicit activities, such as money laundering and terrorist financing.

One of the key provisions is the mandatory identity verification for any crypto transactions exceeding 15,000 Turkish lira (roughly £425). This includes a requirement for crypto service providers to verify the identities of users, alongside stringent checks on unregistered wallets. Providers that fail to comply may face restrictions, such as halting transactions or severing business relationships with non-compliant users.

Additionally, firms operating in Turkey’s crypto sector will need to obtain licenses from the Capital Markets Board (CMB) and will be subject to oversight by the Financial Crimes Investigation Board. The country's Scientific and Technological Research Council (TÜBITAK) will audit the technological infrastructure used by these firms, ensuring their systems meet the new standards.

While these regulations are seen as a necessary step to safeguard consumers and bolster the country’s financial security, critics caution that they could discourage innovation. Small startups may struggle with the compliance costs, potentially stifling growth in the sector. However, established international firms could see the regulations as an opportunity to expand their presence in Turkey.

These developments come as Turkey continues to rise in global crypto adoption, ranked eleventh globally for its crypto activity. Despite the restrictions on crypto payments, Turkey's crypto landscape is evolving rapidly, with these regulations poised to reshape its future.