Today's world, where technology and the globalization are developing at a great pace, brings many new developments. Some of the biggest developments are cryptocurrencies, which may be defined as "international currencies." These cryptocurrencies raise the concern of many investors, while also drawing attention to many of them for reasons that they are not subject to inspection by any institutions, their inventors are anonymous, and they only exist in the digital world. There is no doubt that we will be often hearing of cryptocurrencies in the upcoming years, especially Bitcoin, which is one of the most popular examples, and the fact that these cryptocurrencies already expand the scope of existing definitions under current legislations. This newsletter article examines cryptocurrencies under Turkish law, including Bitcoin, their legal natures and recent developments in foreign jurisdictions.
Legal Nature of Bitcoin
The Bitcoin is defined as a digital currency, which uses blockchain technology. The Bitcoin is subject to direct transactions, which are carried out by virtue of a peer-to-peer system.1/sup> As explained, above, the inventor of the Bitcoin is still anonymous, and the transactions in relation to the Bitcoin are not subject to the inspection of any authority. It is possible to say that the current definitions under Turkish law are insufficient to define the legal nature of cryptocurrencies, and also the Bitcoin, since cryptocurrencies do not fall within the scope of current definitions, as explained in detail, below. Current definitions that are mostly related to cryptocurrencies are as follows:
Money: There is no definition of "money" under Turkish law. However, Article 99 of Turkish Code of Obligations numbered 6098 regulates that monetary obligations shall be paid with domestic currency. Domestic currencies are defined as "currencies which have been issued by the authorized organs of a country."2 Cryptocurrencies are "independent" since they are not regulated by any country or authority. Therefore, some opinions defend that cryptocurrencies do not fall into the scope of the definition of "money" under our legislation.3
Electronic Money: Electronic money is defined under the Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions numbered 6493 as the "monetary value that is issued upon receipt of funds by an electronic money issuer, stored electronically, used to make various payment transactions, and accepted as a payment instrument, also by real and legal persons other than the electronic money issuer." As is understood from the definition, electronic money under Turkish law is issued by legal entities that have been authorized by the Central Bank of the Turkish Republic. Therefore, it is possible to say that the cryptocurrencies do not fall into the scope of this definition. Moreover, the Banking Regulation and Supervision Agency has declared that: "The Bitcoin is not issued by an official or private institution and does not grant a security in return and, therefore, it cannot be defined as electronic money under Law No. 6493, and it is not possible to inspect and supervise it under the said law4."
Goods: The Turkish Civil Code numbered 4721 does not define "goods". However, as accepted in the doctrine, the properties that may be possessed and have a materiality, except for persons, are defined as goods.5 There are opinions that cryptocurrencies cannot be defined as goods since they cannot fulfil the criteria of materiality due to the reason that they are traded only through digital platforms.6 However, it should be added that there is an opinion which defends that the provisions on goods shall be applied to cryptocurrencies by analogy.7
Securities: Pursuant to Article 3 of the Capital Market Law numbered 6362, the securities are defined as "with the exception of money, cheques, bills of exchange and promissory notes; 1) Shares, other securities similar to shares and depositary receipts related to these shares, 2) Debt instruments or debt instruments based on securitized assets and revenues, as well as depository receipts related to these securities." As is understood from the definition, it is also not possible to define cryptocurrencies as securities. Moreover, it shall be noted that under Bulletin numbered 2018/42, the Capital Markets Board has explicitly stated that the sale of cryptocurrencies falls outside their regulation and supervision scope.8
The current definitions under Turkish law are not sufficient to define the Bitcoin. Therefore, the relevant legislation of the Bitcoin and the competent authority for its supervision remains uncertain for now. Although there has not been an official announcement, there are expectations that the Capital Markets Board will take steps for the supervision and monitoring of the Bitcoin.9
Bitcoin under Foreign Legislations
There is no aligned opinion on the Bitcoin's legal nature in foreign legislations. The European Court of Justice states in their ruling dated October 22, 2015 that payments made with the Bitcoin are no different from any other payment methods, and it evaluates the Bitcoin as "money."10 The Ministry of Finance of Germany declares that the Bitcoin is neither electronic money nor a foreign currency.11 The revenue administration of New York accepts the Bitcoin as "intangible goods" in terms of sales taxes; however, it accepts the Bitcoin as "goods" in terms of income and corporate taxes.12
Moreover, it shall be noted that there are many disputes arising from the Bitcoin in foreign countries, and such disputes are before the courts. For instance, the case filed by Ira Kleiman and W/K Info Defense Reserach LLC against Craigh Wright who is the alleged inventor of the Bitcoin is related to the ownership of a large number of Bitcoins.13 Various opinions believe that this case will set a precedent for future disputes on the Bitcoin.14
Cryptocurrencies, especially the Bitcoin, are referred to as "independent" currencies, since they are not subject to the supervision and regulation of any authority. While some investors find this independency concerning, many investors define the Bitcoin as the biggest investment of the future. It appears that the foreign jurisdictions trying to integrate this subject to their legal system, and also the disputes in this subject, are being submitted to the courts. Although there is no official development in this regard in Turkish legislation, it is certain that any regulation to be made on this subject will have a significant impact on many areas, such as the Banking and Finance Law, Capital Markets Law, taxes, inheritance, property sharing, company capital, and even enforcement and bankruptcy.
1 Tevetoglu, Mete: "Bankacilik ve Sermaye Piyasasi Hukuku Perspektifinden Bitcoin Davalari," Banka ve Finans Hukuku Dergisi, V. 9, No. 34, 2020, p. 550
2 Kiliçoglu, Ahmet M; Borçlar Hukuku Genel Hükümler, 14. p., Ankara, Turhan Kitabevi, 2011, p. 584.
3 Turansoy, Asuman: "Kripto Paralarin Ortaya Çikmalari ve Hukuki Nitelikleri," Banka ve Ticaret Hukuku Dergisi 2019, V. XXXV, No. 3, p. 48.
4 Bankacilik Denetleme ve Düzenleme Kurumu, Ödeme Sistemleri ve Elektronik Para Kuruluslari'na iliskin Sikça Sorulan Sorular, https://www.bddk.org.tr/Sss-Kategori/Odeme-Sistemleri-ve-Elektronik-Para-Kuruluslari/3 (Access date: 18.11.2020).
5 Bilgili, Fatih; Cengil, Fatih: Bitcoin Özelinde Kripto Paralarin Esya Niteligi Sorunu, https://www.academia.edu/40037816/BITCOIN_%C3%96ZEL%C4%B0NDE_KR%C4%B0PTO_PARALARIN_E%C5%9EYA_N%C4%B0TEL%C4%B0%C4%9E%C4%B0_SORUNU_THE_QUESTION_OF_PROPERTY_QUALIFICATION_OF_CRYPTOCURRENCIES_SPECIFIC_TO_BITCOIN (Erisim tarihi: 19.11.2020).
6 Bilgili / Cengil.
7 Bilgili / Cengil.
8 https://www.spk.gov.tr/Bulten/Goster?year=2018&no=42 (Access date: 19.11.2020).
10 https://cei.org/blog/germany-legalizes-bitcoin-competing-currencies-are-here (Access date: 19.11.2020).
11 Mert, Alican: Deniz Kabugundan Kripto Paraya: Bitcoin'in Vergisel Boyutu, 2018, p. 325-328.
12 Mert, p. 333.
13 https://www.theblockcrypto.com/post/78413/craig-wright-kleiman-bitcoin-trial (Access date: 19.11.2020).
14 https://cointelegraph.com/news/wright-v-kleiman-enters-final-act-document-reveal-may-set-precedent (Access date: 19.11.2020).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.