CONSTITUTIONAL COURT ANNULS CORE PROVISIONS OF THE FOREIGN EXCHANGE (FX) REGULATORY FRAMEWORK

20/11/2025

With its decision dated 17 June 2025 and numbered 2024/193 E., 2025/136 K., published in the Official Gazette on 15 October 2025 (No. 33048), the Constitutional Court of Türkiye (“Constitutional Court” or “TCC”) annulled key provisions of Law No. 1567 on the Protection of the Value of Turkish Currency (“Law”).

• Article 1 of the Law was found unconstitutional, and—as explicitly stated in Section VI (“Ruling”) of the decision—the entry into force of the annulment was postponed for nine months from the date of publication in the Official Gazette.
• Articles 2 and Additional Article 5, which were functionally dependent on Article 1, were annulled with immediate effect on the grounds that their applicability no longer existed.

Given that Article 1 has served since 1954 as the overarching legal basis for regulations concerning foreign exchange transactions, capital movements and negotiable instruments, and that a wide range of secondary legislation—including Decree No. 32 on the Protection of the Value of Turkish Currency, Communiqué No. 2008-32/34, and the Central Bank Capital Movements Circular—has been enacted under this provision, the Court’s decision is expected to have significant economic and legal consequences.

Article 1 empowered the President to regulate imports and exports involving foreign currency, precious metals, and various financial instruments. Following an amendment in 2018, this authority—previously held by the Council of Ministers—was transferred to the President, enabling the issuance of multiple regulations affecting economic activity, including the prohibition of certain foreign-currency-denominated contracts. The Constitutional Court identified the following constitutional violations:

• The Law does not provide sufficient principles and framework governing the scope of the delegated regulatory power.
• Entrusting such broad regulatory authority to the executive without stipulating fundamental principles violates the non-delegation doctrine inherent in the constitutional monopoly of legislative power.
• Given that these regulations directly affect fundamental rights and freedoms, the lack of clear legal limitations is incompatible with Article 13 of the Constitution.
• For these reasons, the provision was found unconstitutional under Article 7 of the Constitution; Articles 2 and Additional Article 5 were also annulled as they had lost their enforceability.

In the dissenting opinion, it was argued that the FX regulatory domain is highly technical and sensitive to sudden developments, making it impractical to regulate every aspect at the statutory level; that the authority was inherently limited by the objective of “protecting the value of Turkish currency”; and that the provision did not conflict with the Constitution.

The Constitutional Court postponed the entry into force of the annulment to 15 July 2026, noting that immediate invalidation would create a legal vacuum detrimental to the public interest. During this interim period, the Grand National Assembly of Türkiye (“TBMM”) is expected to introduce a new legislative framework that provides clear and specific statutory authorization not only for FX transactions but also for all secondary legislation enacted pursuant to Article 1. Otherwise, the existing regulatory framework will lose its statutory basis.

In this context, the Constitutional Court’s decision—by eliminating the fundamental legislative basis of Türkiye’s FX regulatory regime—signals a critical transition period during which markets, financial institutions, and regulatory authorities will need to closely monitor the development of the new statutory framework.

 

 

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