Turkish Government Warms Up to Crypto, Charts Regulatory Course

In brief

  • A senior Turkish minister said that he’s recently had a change of heart about crypto, also highlighting the government’s plans to regulate it.
  • Experts told Decrypt that fraud in crypto is a growing concern in Turkey.

Turkish Minister of Industry and Technology, Mustafa Varank, said today in an interview with the local media Bloomberg HT that the government will soon introduce crypto regulations, also adding, “I’m no longer feeling negative toward crypto. Now I understand that they are effective.”

Varank also said, however, that “cryptocurrency is ripe for fraud.” Said the minister: “We won’t give free rein to the cryptocurrency space that has such high risks.”

Varank’s remarks follow President Erdoğan’s statement last Friday that the government is currently working on a plan to lay the economic and legal foundations for cryptocurrencies.

Mehmet Türkarslan, legal counsel at the Turkish crypto exchange Paribu, told Decrypt that the industry is aware of novice traders being defrauded by bogus financial advisors who promise high returns on crypto investments.

“These so-called advisors initially help their unwitting clients achieve handsome profits,” Türkarslan told Decrypt, “and having won their trust, these con artists fuel anxiety and prompt their victims to be allowed access to crypto exchange accounts.”

Fraudsters tell their victims they could help them make even more profits if allowed direct access via TeamViewer, a remote desktop software, to their crypto exchange accounts. Once in, they wire the funds to their own accounts and simply vanish, explained Türkarslan.

“Fraud is a genuine concern in the Turkish crypto market as it is elsewhere in the world,” Beste Naz Süllü, Research Director at the crypto exchange ICRYPEX, told Decrypt. “The minister’s regulatory ambition to fight that is viewed positively across the industry.”

But there’s no indication what regulatory steps will—or indeed, could—be taken to stop fraud. “It’s a tough one because the clients give full access and explicit consent to these advisors,” said Türkarslan.

“There’s cross-party support for crypto regulations targeting fraud,” Alper Akalın, a co-founder of Turkey’s opposition party, DEVA, told Decrypt, “but that’s probably just a smokescreen for the government’s desire to raise tax revenue given its financial troubles.” (DEVA’s leading co-founder is Ali Babacan, who served as President Erdoğan’s economic minister during the lira’s golden years of 2002-2013.)

“As more and more Turks switch from investing in conventional assets to cryptocurrencies,” Türkarslan told Decrypt, “Turkish officials fret losing a potentially significant amount of tax revenue.”

Turkish crypto exchanges have been telling the government that a regulatory sweet spot is necessary, explained Türkarslan. Levying a punitive tax on crypto might just push Turks to seek loopholes, resorting to foreign exchanges that the government cannot regulate in the first place. “Such a heavy-handed move may have chilling effects on the local crypto industry, and the government might just end up with no viable revenue,” Türkarslan told Decrypt.

“There’s a global trend towards regulating crypto as assets rather than alternative currencies, and we certainly hope the Turkish government will also take this approach.”

There’s a silver lining in all this, according to Akalin. “Government wanting to regulate crypto is often a win for crypto—it means they now officially recognize it.”

“The recent institutional interest in crypto, especially Elon Musk, was a wake-up call to the Turkish government,” said Türkarslan. “That might explain why the minister says he’s had a change of heart.”

Turkish government officials are known to closely follow Musk. Turkish President Erdoğan first met him in 2017 to discuss car production. They last spoke in January reportedly about space exploration, but there are no reports of crypto talk… for now.


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South Korea’s Tax Agency Clamps Down on Individuals Hiding Assets Via Crypto

South Korea’s tax authority is targeting individuals who use cryptocurrency to conceal their assets as a way of evading tax payments.

NTS Investigating Tax Offenders Concealing Assets Using Cryptocurrecy 

According to the Korea Herald on Monday (Mar. 15, 2021), the National Tax Service (NTS) clamped down on over 2,400 tax offenders who hid their assets using bitcoin and other cryptocurrencies to avoid paying taxes. The tax authority stated the total assets concealed amounted to about 36.6 billion won ($32.2 million).

Back in May 2018, South Korea’s Supreme Court ruled that cryptocurrencies fell under intangible assets, making them liable to seizures. Following the ruling, the NTS became the first government agency to clamp down on individuals thought to be concealing assets.

The NTS was able to sniff out tax offenders after collecting data from local cryptocurrency exchanges. South Korea’s law mandates exchanges to implement a real-name verification system in conjunction with registered Korean banks to combat money laundering. Recently, the country’s Financial Services Commission (FSC) announced that exchanges that fail to comply with existing laws would soon face stiff penalties.

Meanwhile, the NTS crackdown was aimed at individuals with more than 10 million won ($8,800) in tax defaults. Also, the tax authority is carrying out more investigations over 200 such tax offenders who are reportedly guilty of further tax evasion. 

A statement from the South Korean tax agency said:

“The recent probe was a part of our ongoing efforts to strengthen a crackdown on anti-social tax dodging. We will capture highly intellectualized (tax evading) cases and quickly redeem their concealed properties.”

The NTS investigation comes amidst a recent surge in crypto transactions in the country. According to the agency’s data, the number of cryptocurrency investors grew over 300 percent in the 12 months, with daily crypto transactions increasing eightfold from 2020. 

While the NTS is targeting tax offenders, the South Korean government is preparing to impose a 20 percent tax on crypto trading profits exceeding $2,200 in January 2022 after various postponements.

However, the impending tax law has faced criticism, with comments that the tax policy could stifle crypto development in South Korea. Also, there is an ongoing petition against the tax law, which has received over 36,000 signatures. 

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Price analysis 3/15: BTC, ETH, BNB, ADA, DOT, XRP, UNI, LTC, LINK, BCH

The 2017 Bitcoin (BTC) bull run was led by retail traders, long-term crypto believers and Bitcoin whales. However, the tide turned in 2020 as institutional investors became the catalyst for the latest crypto bull run.

However, data compiled by JPMorgan Chase shows that retail traders have made a strong comeback in the first quarter of this year. JPMorgan analysts used data from Square and Paypal to determine that retail investors bought 187,426 BTC for Q1 2021, which is more than the institutional purchase of 172,684 BTC during the same period.

While this data may not be bulletproof, it gives a good overview of the underlying sentiment from both parties.

Daily cryptocurrency market performance. Source: Coin360

Recent data from CoinMarketCap showed that the total volume of crypto transactions from major South Korean crypto exchanges during a 24-hour period on Sunday was $14.6 billion, eclipsing the $14.5 billion handled by South Korea’s Composite Stock Price Index on March 12.

While increased participation is a positive sign, a strong bull market also attracts several weak hands who dump their positions on every minor news and event. This could lead to increased volatility in the short term.

Let’s study the charts of the top-10 cryptocurrencies to spot the critical support and resistance levels that may attract traders.