Innovation and Growth in Turkey's Web3 Ecosystem

Today, I am speaking with Yves La Rose, and we'll discuss the evolving blockchain and cryptocurrency landscape in Turkey, focusing on innovation, regulatory changes, and the increasing adoption of digital assets among Turkish citizens.

Please introduce yourself and tell us what you do.

My name is Yves La Rose, and I am the founder and CEO of the EOS Network Foundation (ENF).

The ENF was created to promote technological advancement and the sustainable growth of EOS. This includes key initiatives like educating developers, supporting the community, funding research, and enhancing EOS's technological base through the development of its core protocol.

Our goal is to unlock the full capabilities of blockchain technology, forging a sustainable digital future that offers tangible benefits to developers, businesses, and consumers.

Can you provide an overview of the recent changes in Turkey's stance towards crypto regulation and what prompted this shift?

Turkey has been preparing new legislation covering crypto-assets as a way to persuade an international crime watchdog, the Financial Action Task Force (FATF), to remove it from a "grey list" that it has been on since 2021 of countries that have taken insufficient action to prevent money laundering and terrorist financing.

The specifics of Turkey's new rules to regulate the crypto market are yet to be made public but will likely focus on licensing and taxation.

How significant is cryptocurrency adoption among Turkish citizens, and what factors have contributed to this high level of adoption?

The main reason for the adoption of cryptocurrencies in Turkey is the general lack of trust in the stability of the Turkish Lira, prompting people to explore other financial options to protect their assets.

The lira has seen record inflation levels over the last few years, making wealth accumulation nearly impossible. Even before crypto began to take off in Turkey, it was pretty standard for most retail establishments to accept alternative paper currencies such as the Euro and US dollar.

The adoption of cryptocurrencies can be seen as the evolution of that trend. As a matter of fact, Tether is one of the most widely used currencies in the Turkish market, and it is commonly accepted as a form of currency there. Recent studies have indicated that up to 40% of Turkish citizens have a crypto wallet.

What specific regulations has the Turkish government introduced, and how do they compare to those in the EU, particularly the MiCA regulation?

The new regulations have yet to be officially proposed, so it is difficult to make comparisons at this time, but it can be assumed that there will be some inspiration from MiCA.

Turkey will likely focus on licensing and taxation. Introducing specific licensing standards will be one of the top priorities for the upcoming regulation to prevent system abuse. The regulations could also include capital adequacy requirements, custody services, mandatory proof of reserves, and other measures to improve digital security.

How does President Erdoğan's approach to crypto regulation post-election reflect on Turkey's political landscape and its impact on digital asset policy?

President Erdoğan has been very forward-looking in his approach to crypto policy. In December, he added blockchain technology and cryptocurrency specialist Fatma Özkul to the central bank's monetary board. She is expected to have a significant impact on the forthcoming crypto laws that were considered.

How do you assess the potential of projects like the EOS Network Foundation’s Turkish Web3 Industry Lab's expansion into the Turkish market?

The country's growing prominence in the cryptocurrency sector drove the decision to establish a lab in Turkey. Turkey’s adoption rate for crypto is among the highest in the world, with recent surveys estimating that two-fifths of Turkish citizens currently hold crypto.

This widespread adoption is mainly attributed to the high inflation rates in Turkey, prompting residents to turn to cryptocurrencies as a hedge against the declining value of the Turkish lira.

The adoption rate makes the barrier to entry for new user acquisition in Turkey incredibly low, giving blockchain startups a greater chance for success than in other markets, requiring significantly more user education for onboarding the masses.

The Turkish market has also shown a keen interest in technological innovations, with a burgeoning community of developers, entrepreneurs, and enthusiasts actively engaging with blockchain technology. This provides a fertile ground for incubating new blockchain projects, as both the technical talent and the market are eager to adopt new digital solutions.

High crypto usage, a climate influenced by economic considerations that promote digital currencies, and a fast-expanding market excited about blockchain developments make Turkey a unique opportunity for crypto investors and users. These elements collectively make Turkey an up-and-coming location, aligning perfectly with our vision of fostering groundbreaking projects in the blockchain space.

Can you discuss the growth of Web3 activity at the grassroots level in Turkey and how international partnerships influence this landscape?

At the grassroots level, we’ve seen an uptick in in-person events in Turkey. Each of these events presents opportunities for new connections at the local grassroots level.

International partnerships have played a significant role in facilitating these events and ensuring their success, as seen with last year’s Binance Blockchain Week Istanbul and the ETHGlobal Istanbul hackathon, which brought together and showcased Turkey's growing web3 developer and startup communities. We also hosted our event in partnership with CoinTR to celebrate their 2nd year anniversary.

How can Turkey leverage its unique position to become a global blockchain innovation and adoption leader?

Turkey just needs to continue on the path that it is currently on. We will see new regulations in 2024, which will ideally lead to Turkey being removed from the FATF grey list, which should be a significant step forward.

We also saw two of Turkey’s largest banking groups announce their crypto initiatives in December, which could be the beginning of this trend that will continue into this year. The investment division of Akbank acquired,

Stablex a crypto company that enables transactionvs via the Turkish Lira and Garanti BBVA launched their digital wallet as a mobile app.