Financial Crime World

Fintech Regulation and Oversight Evolving in Turkey

Turkey’s regulatory environment for fintech is undergoing significant changes to address emerging challenges and risks in the financial sector while promoting innovation. The country’s lawmakers and regulators aim to strike a balance between fostering the growth of its fintech sector and ensuring robust oversight to maintain stability and protect consumers.

Key Challenges in Fintech Regulation

  • Localization of systems and data: Local establishment and operation are required for any fintech service subject to a license.
  • Regulatory approach: The focus is on establishing a comprehensive infrastructure to implement financial and information security measures.

Primary Legislation Governing Fintech

  • Law No. 6493: Payment Services and Electronic Money Institutions: Regulates the activities and licensing of payment systems, electronic money institutions, and payment institutions in Turkey.
  • Regulation Prohibiting Payments Through Crypto Assets (2021): Prohibits licensed payment institutions and electronic money institutions from using cryptoassets in their operations.

Cryptoasset Regulation

  • Cryptoasset service providers: Considered “obliged parties” under the MASAK Regulation, subject to inspection by the Turkish Financial Crimes Investigation Board.
  • Decentralized finance (DeFi): Not specifically regulated; general legal framework may apply depending on the nature of activities involving smart contracts and blockchain-based financial services.

Incentives for Fintech Startups

  • Istanbul Finance Centre Law No. 7412: Aims to increase Turkey’s financial competitiveness, strengthen integration into international financial markets, develop high-value-added financial products and services, and promote the Istanbul Finance Centre as an international finance hub.
  • Tax incentives under Law No. 4691 on Technology Development Zones: Fintech companies located in technoparks can benefit from numerous tax incentives.

Fintech Sector Growth

  • Number of fintech companies in Turkey (as of September 2023): Total of 803.
  • Accredited payment and e-money fintech companies within Turkey (as of February 2023): Increased to 74.