Bitcoin under Turkish Law
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] 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 law[4].”
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]
Conclusion
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.
- Tevetoğlu, Mete: “Bankacılık ve Sermaye Piyasası Hukuku Perspektifinden Bitcoin Davaları,” Banka ve Finans Hukuku Dergisi, V. 9, No. 34, 2020, p. 550
- Kılıçoğlu, Ahmet M; Borçlar Hukuku Genel Hükümler, 14. p., Ankara, Turhan Kitabevi, 2011, p. 584.
- Turansoy, Asuman: “Kripto Paraların Ortaya Çıkmaları ve Hukuki Nitelikleri,” Banka ve Ticaret Hukuku Dergisi 2019, V. XXXV, No. 3, p. 48.
- Bankacılık Denetleme ve Düzenleme Kurumu, Ödeme Sistemleri ve Elektronik Para Kuruluşları’na ilişkin Sıkça Sorulan Sorular, https://www.bddk.org.tr/Sss-Kategori/Odeme-Sistemleri-ve-Elektronik-Para-Kuruluslari/3 (Access date: 18.11.2020).
- Bilgili, Fatih; Cengil, Fatih: Bitcoin Özelinde Kripto Paraların Eşya Niteliği 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 (Erişim tarihi: 19.11.2020).
- Bilgili / Cengil.
- Bilgili / Cengil.
- https://www.spk.gov.tr/Bulten/Goster?year=2018&no=42 (Access date: 19.11.2020).
- https://uzmancoin.com/bitcoin-kripto-para-spk/ (Access date: 19.11.2020).
- https://cei.org/blog/germany-legalizes-bitcoin-competing-currencies-are-here (Access date: 19.11.2020).
- Mert, Alican: Deniz Kabuğundan Kripto Paraya: Bitcoin’in Vergisel Boyutu, 2018, p. 325-328.
- Mert, p. 333.
- https://www.theblockcrypto.com/post/78413/craig-wright-kleiman-bitcoin-trial (Access date: 19.11.2020).
- https://cointelegraph.com/news/wright-v-kleiman-enters-final-act-document-reveal-may-set-precedent (Access date: 19.11.2020).
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
The emergence of the installment sale (taksitle satış) as a distinct type of contract compared with an ordinary sale is rooted in economic necessity: it enables individuals who cannot afford to pay the full price at once to immediately benefit from the goods they wish to purchase, thereby stimulating the market and...
The claim for excess damages has long been a subject of debate in Turkish law of obligations as a type of claim seeking compensation for the creditor’s loss arising from the default in payment of monetary debts, which cannot be covered by default interest. Particularly during periods of high inflation, the relevance...
One of the fundamental principles of the Turkish Civil Code (“TCC”) is the principle of reliance on the land registry. This principle plays a decisive role in the acquisition and protection of real rights. In practice, construction agreements in exchange for land share are frequently encountered. In such contracts...
Lease agreements are among the contracts that grant tenants the right to use immovable property for a certain period in exchange for payment and impose significant obligations on the parties. Under Article 310 of the Turkish Code of Obligations (“TCO”), if the ownership of an immovable property changes, the...
Adaptation of the lease agreement cases is among the most frequently encountered legal disputes, especially in the event of economic fluctuations and changes in market conditions. In these cases, it is requested that the rental price be adapted according to the current conditions. Article 138 of the Turkish Code of...
Article 351 of the Turkish Code of Obligations (“TCO”) regulates the new owner’s right to evacuate the immovable property for its needs following the acquisition of the right of ownership. Whether this provision applies to the new owners who were previously joint owners of the immovable property has been the subject...
The assumption of a debt or an act (performance) of a third party has a critical role in the maintenance of commercial relations and the resolution of commercial disputes. The Court of Cassation General Assembly of Civil Chambers (“General Assembly”) recently issued a decision numbered...
In general terms, eviction due to the need for residency is a lawsuit regulated under Article 350 of the Turkish Code of Obligations No. 6098 ("TCO") and is filed in the event that the lessee is obliged to use the leased property as a residence or workplace for himself/herself, his/her spouse, descendants, ascendants...
Ordinary partnerships are regulated under Turkish Law between Articles 620 and 645 of the Turkish Code of Obligations No. 6098 (“TCO” or the “Code”). The Law defines an ordinary partnership contract as a contract where two or more persons undertake to combine their labour or property to achieve a common...
The Decree No. 32 on the Protection of the Value of Turkish Currency (“Decree No. 32”) and the Communiqué No. 2008-32/34 on the Decree No. 32 on the Protection of the Value of Turkish Currency (“Communiqué”) prohibit the determination of the contract prices of certain contracts and other payment obligations...
The Constitutional Court's decision dated 14.09.2022 and published in the Official Gazette dated 25.10.2022 and numbered 31994 ("the Constitutional Court Decision") examines whether the start of the application period related to the applicant’s request for appeal being from the date of the pronouncement of...
Although the general principle in the law of contracts is freedom of contract or, in other words, freedom of will, the parties’ wills are not completely free in the case of exemption agreements. The validity of these agreements is limited by the mandatory provisions of the Turkish Code of Obligations...
The Constitutional Court, in its decision dated 14.09.2021 on application no. 2018/25663 (“Decision"), found that applicant Cahide Demir’s right to property was violated on the ground that the mortgage on her real estate, established to secure a third party’s debt, had not been released by the...
The use of general terms and conditions is a commercial reality not only in consumer transactions but also in commercial transactions in certain industries such as automotive, banking, insurance, telecommunications and energy...