Legal Statute of Cryptocurrencies in Turkey

Since crypto assets started to take place in economic life and gained widespread use, countries have felt the need to regulate or follow up on cryptocurrencies, cryptocurrency exchanges, other crypto assets and related issues 

Turkey is no exception. Although Turkey does not prefer to ban cryptocurrencies directly like many other countries, it has felt the need to regulate the legal status of cryptocurrencies by restricting their use as a means of payment and introducing regulations in terms of their relationship with economic crimes. 

What is CyriptoCoin? 

Crypto coins can be defined as digital money created with passwords using blockchain technology and designed as a medium of exchange.  Cryptocurrencies have varieties such as Bitcoin (coin), altcoin (alternative coin) and token. It is considered to be reliable because it is decentralised and the transactions made due to the use of the blockchain structure cannot be changed or copies cannot be made. 

In 2009, cryptocurrencies, which entered circulation with Bitcoin, have gained widespread recognition over time, and with the ease of use of Blockchain technology, which is the basis of Bitcoin, Binance Coin, Tether, Ethereum and thousands of other coins such as this have become widespread and known to everyone. 

As in many countries, legal regulations have been made in Turkey about cryptocurrencies, which are traded as a kind of digital currency and used as an investment tool. 

Since the subject of our article is the legal status of crypto coins in Turkey, it is necessary to explain some concepts such as blockchain, and digital money in order to make the subject understandable. 

What is Blockchain?

Blockchain is essentially a distributed cryptographic system of records that provides a powerful alternative to a single centre-based security system. In very simple terms, it consists of records and blocks. Records can be any content from customer information to transfer information according to the need. The records are processed and placed in blocks and each block is connected to the previous one. Thus, a chain is formed from the first block to the last block. 

Blockchain brings together many different technologies and techniques such as peer-to-peer networks, distributed ledger technology, cryptography, and consensus mechanisms, therefore it is claimed to have an unchangeable structure. 

What is Digital Money? 

Above, we mentioned blockchain and circulation units, mostly called bitcoins. The most important feature of digital money that distinguishes it from other currencies is that there is no central authority behind the money, that is, a Central Bank. The creation of money is basically based on the functions of confirming and recording the transaction and creating a block in the network. 

As a medium of exchange, digital currencies have the functions of money such as being a medium of exchange, being a unit of account and value, and being a means of accumulation. 

Legal Status of Cryptocurrencies in Turkey

In Turkey, there is no special law regulating the ownership of cryptocurrencies or the rights and obligations of the owners. However, the “Regulation on the Prohibition of the Use of Crypto Assets in Payments” published in the Official Gazette dated 16 April 2022 and numbered 31456 is important. According to this Regulation, crypto assets are defined as intangible assets that are created virtually using distributed ledger technology or similar technology and distributed over digital networks but are not considered as fiat money, dematerialised money, electronic money, payment instrument, security or other capital market instrument. 

With the Regulation; 

• Direct or indirect use of crypto assets in payments,
• Providing services for the direct or indirect use of crypto assets in payments,
• Developing business models in a way that crypto-assets will be used directly or indirectly in the provision of payment services and issuance of electronic money, and offering any services related to such business models by payment service providers,
• Acting as an intermediary for platforms offering trading, custody, transfer or issuance services for crypto-assets or fund transfers to be made from these platforms by payment and electronic money institutions.

is forbidden. 

In addition, with the amendment made on 1 May 2021 to the Regulation on Measures to Prevent Laundering Proceeds of Crime and Financing of Terrorism, crypto asset service providers were also listed as liable. Within the scope of the aforementioned regulation, issues such as identification for customer identification, suspicious transaction notification, and providing information and documents to the Financial Crimes Investigation Board (MASAK )Directorate are listed. 

Financial Crimes Investigation Board also published a guide for the crypto asset service providers. 

Is Cryptocurrencies Forbidden In Turkey? 

Regarding cryptocurrencies, many countries have made various legal arrangements with impulses such as ban, regulate or follow. The clear answer to whether crypto assets are legal in Turkey is that they are legal. However, they are not allowed to be used as a means of payment. 

In addition, holding crypto assets or making various transactions with them is definitely not regulated as a crime and is not subject to criminal sanctions. It is only possible to follow up on the possibility of being associated with various economic crimes such as money laundering or terrorism financing. 

Conclusion 

The cyrpto currencies and its legal statue in Turkye, we examined in this particular article, span commercial, criminal, and administrative law, emphasising the regulations for both its usage and its organization. 

While there is no specific law governing ownership or rights and obligations related to cryptocurrencies, the mentioned Regulation explicitly prohibits the direct or indirect use of crypto assets in payments, as well as the provision of services related to such use. Additionally, the amendment to the Regulation on Measures to Prevent Laundering Proceeds of Crime and Financing of Terrorism in May 2021 holds crypto asset service providers accountable, outlining measures for customer identification, suspicious transaction reporting, and cooperation with the Financial Crimes Investigation Board Directorate. Consequently, the legal framework in Turkey reflects an effort to regulate and mitigate potential risks associated with the use of cryptocurrencies in financial transactions and services.

How We Can Assist You? 

We are acquainted that navigating the complexities of a new area like crypto assets in Turkey requires a comprehensive understanding of the legal framework outlined in the mentioned regulations and other associated legislation. 

As Viridis Legal Partners, we recognize the intiricate nature of work permits fuse commercial law to criminal law, and are here to assist you. With our expert team of digital currency legal services and distinguished decentralized finance (DeFi) legal counsel in the nuanced landscape of crypto assets, we offer tailored legal services to simplify the compliance process and provide guidance on meeting the stipulated area. 

Contact us to be your trusted legal partner. 

FAQ

• What are cryptocurrencies, and how are they defined in Turkey?
  • Cryptocurrencies are digital money created through blockchain technology. In Turkey, they are defined as intangible assets created virtually using distributed ledger technology and distributed over digital networks, but they are not considered fiat money, dematerialized money, electronic money, payment instruments, securities, or other capital market instruments.
• Is there a specific law governing ownership and rights related to cryptocurrencies in Turkey?
  • As of now, there is no specific law regulating the ownership of cryptocurrencies or the rights and obligations of their owners in Turkey.
• What regulations restrict the use of cryptocurrencies in Turkey?
  • The “Regulation on the Prohibition of the Use of Crypto Assets in Payments,” published in April 2022, restricts the direct or indirect use of crypto assets in payments, provision of services related to such use, and the development of business models involving crypto assets in payment services.
• Are cryptocurrencies forbidden in Turkey?
  • Cryptocurrencies are legal in Turkey, but their use as a means of payment is explicitly forbidden. Holding and conducting transactions with cryptocurrencies are not regulated as crimes, but there are concerns about potential associations with economic crimes such as money laundering or terrorism financing.
• What responsibilities do crypto asset service providers have in Turkey?
  • Crypto asset service providers are held accountable for customer identification, reporting suspicious transactions, and cooperating with the Financial Crimes Investigation Board (MASAK) Directorate, as outlined in the Regulation on Measures to Prevent Laundering Proceeds of Crime and Financing of Terrorism.
• Is there any legal framework governing cryptocurrencies in Turkey?
  • While there is no specific law on ownership or rights related to cryptocurrencies, the existing regulations aim to regulate and mitigate potential risks associated with the use of cryptocurrencies in financial transactions and services.

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