Turkey's recent ban on PancakeSwap may mark the beginning of more stringent regulatory actions targeting decentralized finance (DeFi) platforms.
PancakeSwap Ban Sparks Concern
The Turkish authorities issued a ban on PancakeSwap on July 4, directing internet service providers to block access to the platform along with 46 other websites. The ban also extended to PancakeSwap's mobile applications and social media accounts, raising concerns within the DeFi community. While PancakeSwap operates as a decentralized protocol without a legal presence in Turkey, regulators argued that it violated 'dissemination principles' by marketing its services to Turkish users. However, they did not specify which promotional activities were directed at citizens of the country.
DeFi Platforms to Follow Centralized Rules
According to a transcript shared with ETHNews, new enforcement criteria will apply not only to centralized crypto exchanges but also to DEXs and even non-custodial wallets. This means that DeFi platforms will need to adhere to similar licensing and compliance standards as traditional financial institutions if they are found to be targeting Turkish users. Ali İhsan Güngör, Executive Vice Chairman of the CMB, clarified the regulatory stance: 'A Turkish citizen can, entirely of their own free will, receive services from another institution abroad... However, if institutions or entities providing DeFi services direct their activities towards Turkey through widespread promotion, advertising, or marketing, then they become subject to our regulations.'
Regulatory Measures and the Future of DeFi in Turkey
The Turkish government has not banned the use of DeFi protocols outright, but it appears focused on regulating their exposure to Turkish residents. The PancakeSwap ban highlights the increasing regulatory scrutiny of decentralized platforms, especially those that blur the lines between passive accessibility and active promotion. DeFi projects operating without a local legal entity may find it challenging to comply with Turkish licensing rules. Given PancakeSwap's decentralized nature, it lacks the structure necessary to seek such approvals. As Turkey actively develops its crypto regulatory framework, more DeFi services may face restrictions if they do not navigate the legal landscape carefully.
While cryptocurrency remains legal in Turkey, the distinction between accessibility and promotion is becoming increasingly important, placing the DeFi sector firmly in regulators' sights.
