The mankind developed trade in order to survive and meet its needs. While the first trade was carried out through the exchange of goods, with the Lydians inventing money, humanity accepted money as a means of exchange to make trade faster and easier, and for centuries money has affected human life in different ways.

With the technology becoming an important part of our lives, the transfer of our daily business to the digital world, and the growth of electronic commerce[1], cryptocurrencies, of which importance is increasing day by day and which are being accepted as a valid payment tool by more people and countries, are widely used in our country as well. In fact, according to a survey conducted in May 2020 in terms of number and users of crypto currency used in the world, Turkey is ranked in the seventh place[2].

So, what is the situation of cryptocurrencies of which use is expected to increase, and which have a widespread use in Turkey, under the Turkish legal system?

1. What do digital currency and cryptocurrency mean?

Digital currency is defined by the European Central Bank as “digital currency that has no regulation, and that is issued and controlled by its developers and is accepted within a certain virtual environment.”[3]

Digital currency, which has been increasingly used since the end of the 1980s, is the representation of physical currency, and today many transactions are carried out via transfer of digital currency. In particular, most of the payment transactions are carried out via digital currency, today.

Cryptocurrency is a digital or virtual currency that uses cryptography to ensure security[4]. According to another definition; cryptocurrency is “a digital asset that enables secure transactions in encrypted form and additional virtual currency supply.”[5] Cryptocurrencies are also a type of digital currency; however, they distinctly are digital assets developed with certain cryptography principles[6].

Bitcoin, Ethereum, Ripple, Litecoin, which we hear almost every day and have their own markets, can be shown as examples of cryptocurrencies.

2. What is the situation of cryptocurrency under other countries’ legal systems?

Cryptocurrency is legally accepted in the United States of America and has been subject to various regulations in terms of both tax law and capital market law. However, harmonization of the regulations on the definition of cryptocurrencies is ongoing between the States[7].

Similar to the United States, cryptocurrencies are regulated in Canada in terms of tax law and capital market law.

In the UK, although there is no cryptocurrency regulation in force, Bitcoin transactions are considered as forex transactions and are subject to taxation.

There is no cryptocurrency regulation in the European Union to cover all the Member States. Despite that, there are cryptocurrency regulations in Germany, Estonia, Belgium, and Sweden.

Bolivia, Colombia, and Ecuador have completely banned cryptocurrencies, and trading or investing in cryptocurrencies is not allowed.

3. What is the situation of cryptocurrency under the Turkish legal system?

Even though Turkey is among the few countries in the world in terms of the number of cryptocurrencies and of users, there are no regulations on cryptocurrency in Turkey. Despite that, the special measures concerning cryptocurrency has been mentioned in Turkey’s 11^th Development Plan. Turkey is also trying to create its own cryptocurrency[8].

Even though cryptocurrency is not regulated under the Turkish law, electronic money has been defined for the first time under the Law on Payment and Security Settlement Systems, Payment Services and Electronic Money Institutions numbered 6493 (“Law”) which was entered into force in the Official Gazette dated 27 June 2013 and numbered 28690. According to the definition, under the Turkish law, electronic money is “monetary value issued upon the receipt of funds accepted by the electronic money issuer, stored electronically, used to perform payment transactions defined in this Law and accepted as a means of payment by real and legal persons other than the electronic money issuer.”

According to the Law, to be regarded as the electronic money monetary value should be;

• issued by an electronic money issued authorized under the Law,
• issued upon the funds accepted by the electronic money issuer,
• stored electronically,
• used a means of payment methods defined under the Law,
• accepted as a means of payment by real and legal persons other than the electronic money issuer.

Electronic money has been defined in a very narrow scope and shall meet the strict conditions in the Law.

Electronic money defined in the Law should be considered in the definition of digital money as we have defined above because it is stored in an electronic environment and issued in exchange of certain funds, it is not possible to say that cryptocurrency falls within the definition of electronic money defined in the Law.

Although cryptocurrencies have not had a legal basis as a legal currency in our country yet, works on the legal basis and regulation of cryptocurrencies as a legal currency continue depending on the market demand and in line with the goals set in the 11th Development Plan. Recently, the authorization of the Capital Markets Board on this issue has come to the fore.

In the current legal structure, there is no explicit regulation that prevents the use of cryptocurrency. In other words, trading in and exchange with cryptocurrency and even investments with cryptocurrency do not have legal obstacles in Turkey. Despite that, there are opinions in the doctrine that cryptocurrencies, which are not legally accepted as a currency, should be legally qualified as goods[9]. In accordance with this opinion; although they do not physically exist, the provisions of the Turkish law on goods should be applicable to cryptocurrencies as appropriate due to the facts that there are intermediaries trading cryptocurrencies, cryptocurrencies have a function in economic and business life because of cash and cryptocurrency exchange with an ATM, in the case of Bitcoin, the people who have private keys can dominate the cryptocurrency and economize it[10].

In summary, cryptocurrencies, which have a widespread use all over the world and of which market is growing, are accepted as a legal currency in certain legal systems, while trading with cryptocurrencies is prohibited in some. Although Turkey which is one of the countries where the widespread use of cryptocurrency is in, has not regulated cryptocurrencies. Although regulations on this issue are expected to be issued in the near future, in the current legal structure; there are opinions in the doctrine that cryptocurrencies should be considered as goods and thus under legal protection, as we agreed with them.

---

[1] The electronic trading volume in Turkey reached a volume of 83.1 billion TL only in 2019, see https://www.hurriyet.com.tr/teknoloji/e-ticaret-hacmi-83-1-milyar-tlye-ulasti-41505981 (Access Date: 6 October 2020).

[2] The Information and Communication Technologies Authority’s Report on Cyrptocurrency, Ankara, 2020, p. 7-8.

[3] European Central Bank, Virtual Currency Schemes, October 2012, p. 13, https://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf (Access Date: 6 October 2020).

[4] The Information and Communication Technologies Authority’s Report on Cyrptocurrency, Ankara, 2020, p. 5.

[5] Murat Kesebir, Bülent Günceler; “Kripto Para Birimlerinin Parlak Geleceği”, Iğdır Üniversitesi Sosyal Bilimler Dergisi, V. 17, January 2019, p. 611.

[6] Şerif Dilek, “Blokchain Teknolojisi ve Bitcoin”, Analiz, V. 231, February 2018, p. 14.

[7] https://fintechistanbul.org/2017/08/15/ulkelerin-kripto-para-duzenlemeleri/ (Access Date: 6 October 2020).

[8] The Information and Communication Technologies Authority’s Report on Cyrptocurrency, Ankara, 2020, p. 21 – 22.

[9] Please see for the details, Fatih Bilgili, M. Fatih Cengil; “Bitcoin Özelinde Kripto Paraların Eşya Niteliği Sorunu”, http://www.ticaretkanunu.net/konu/kripto-para/ (Access Date: 6 October 2020).

[10] Bilgili, Cengil; ibid, p. 16 – 21.