Blockchain and crypto money in Turkey Law Firm
Harun Güngör
Blockchain and crypto money in Turkey Law Firm
The Regulation states that within the framework of How to establish a company in Turkey No. 6493 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions ("Payment Services Law"), crypto assets cannot be used directly or indirectly as a method of payment, nor can they be exchanged for services; electronic financial institutions cannot mediate platforms that offer trading, custody, transfer or issuance services for crypto assets, or fund transfers to be made from such platforms.
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Based on the strategies Cryptocurrencies Regulation in Turkey introduced in the Development Plan, Turkey's approach to blockchain and cryptocurrencies has evolved into a more favourable environment. Accordingly, the CMB announced that they are working on regulations on digital assets. As a follow-up, the long awaited Crowdfunding Communiqu entered into force on October 3, 2019 and introduced rules and procedures regarding crowdfunding platforms, the operations of the platforms, the membership and campaign process of these platforms, and the use of funds and venture capital companies.
In this context, the Payment Services Law does not define the term “payment”; however, a "payment transaction" is defined within the framework of the law and refers to "the activity of depositing, transferring or withdrawing funds on the order of the sender or the recipient". The term “funds” refers only to banknotes, coins, cash and electronic money within the scope of its definition in the Payment Services Law. In this regard, it can be said that Blockchain regulations in Turkey assets are only prohibited from use in the infrastructure of payments to be made within this scope. However, the determination of the transactions affected by the article is directly related to the interpretation of the definition of "payment." Consequently, as the provisions of the Regulation lead us to an interpretation closer to the definition of "payment transaction," further explanations will be required from the CBRT to clear the air.
¨C9CFollowing the publication of the Regulation, and commencement of the law enforcement agencies' investigation towards the fraud allegations committed via the cryptocurrency exchanges, an Istanbul-based exchange, Thodex, has suspended operations amid accusations of fraud. Following this incident, the Turkish authorities have raided ¨C17C in Istanbul associated with Thodex and arrested more than 60 people. According to the allegations, Thodex has nearly 400,000 active users, whose accounts were nominally worth a total of USD 2 billion. Another cryptocurrency exchange, Vebitcoin has also collapsed, as it has ceased all activities after facing a financial strain. According to CoinGecko data, Vebitcoin had almost USD 60 million in daily trading volumes prior to its collapse. ¨C10C¨C11CCrypto assets defined as "intangible assets that are created virtually using distributed ledger technology or a similar technology and distributed via digital networks, but are not classed as fiat money, deposit money, electronic money, payment instrument, securities, or other capital market instruments." The usage area of the aforementioned definition is limited within the scope of the Regulation. Therefore, although a definition has been made, a broad definition that will expand the entire legal framework has not yet been included in our legal order.