The Turkish government is preparing legislation that would give the country’s financial watchdog, Masak (Müdürlüklerarası Suç Araştırma Kurulu), the power to freeze accounts linked to cryptocurrencies. This move is part of a broader effort to combat money laundering and other financial crimes, in line with recommendations from the Financial Action Task Force (FATF).

Context and Motivation Behind Turkey’s Crypto Regulation

In recent years, Turkey has witnessed a significant rise in the use of cryptocurrencies like Bitcoin and Ethereum, driven by economic factors such as high inflation and the devaluation of the Turkish lira. This surge has raised regulatory concerns about risks including money laundering, tax evasion, and illicit financing.

According to a Bloomberg report, the Turkish government seeks to expand Masak’s mandate to include the ability to freeze digital assets held in exchanges and wallets, thereby reinforcing financial oversight and transparency within the national crypto ecosystem.

Expanding Masak’s Mandate to Fight Money Laundering

Masak is Turkey’s main agency responsible for preventing money laundering and terrorist financing. Traditionally, its oversight has focused on conventional financial institutions, but the growing popularity and sophistication of cryptocurrencies now demand an update to its powers.

The proposed legislation would grant Masak authority to:

• Investigate suspicious transactions involving cryptocurrencies.
• Order the temporary or permanent freezing of digital assets in exchange or wallet accounts.
• Coordinate with regulators and law enforcement to dismantle money laundering networks.
• Oversee AML compliance by crypto exchange platforms.

These measures aim to close regulatory gaps and ensure that cryptocurrency-related activities meet FATF’s international standards.

Impact on Bitcoin, Ethereum, and Turkey’s Crypto Market

The power to freeze crypto accounts will primarily affect centralized exchanges and custody services operating in Turkey, since decentralized networks like Bitcoin and Ethereum cannot be directly frozen.

This regulation could impact liquidity and accessibility for local crypto users, encouraging migration toward decentralized exchanges (DEX) or self-custody solutions, which pose greater challenges for regulatory oversight.

Regulatory Framework and Alignment with Global Standards

Turkey’s initiative is part of a global trend toward adapting regulations to mitigate risks tied to cryptocurrencies. FATF recommends measures such as user identification (KYC), transaction monitoring, and international cooperation to combat financial crimes.

Turkey already requires local exchanges to register and comply with AML standards. The new legislation will strengthen this approach, positioning Masak as a central player in crypto market supervision.

The effectiveness of these measures will depend on interagency cooperation, technological infrastructure for monitoring, and the response from both private sector actors and users.

Conclusion

Turkey is moving toward stricter cryptocurrency regulation by granting Masak the authority to freeze crypto accounts, in line with FATF standards. The initiative addresses concerns over the illicit use of digital assets and aims to reinforce national financial oversight.

For Bitcoin, Ethereum, and other cryptocurrencies, the change means tighter local regulation, primarily affecting centralized exchanges and custodial services. While decentralization makes direct freezing impossible, the legislation will influence how users interact with Turkey’s crypto ecosystem.

Overall, Turkey’s strategy reflects the global challenge of balancing financial innovation with the prevention of legal and financial risks in the digital era.