Legal Status of Cryptocurrencies in Turkey
The most famous and on-demand type of Cryptocurrency is “Bitcoin” and it was first introduced late 2008.
Cryptocurrency has firstly entered Turkey in 2009 and has caught the attention of many investors and entrepreneurs almost immediately. The rapid growth of the practice and exploration of the usage of Cryptocurrency in Turkey has been noticeable especially since 2013 when certain Turkish regulation authorities and supervision agencies announced the recognition of it.
Fundamentally, Law no. 6439 on Payment Securities Settlement Systems, Payment Services and Electronic Money Institutions (2013) regulates the procedures principles regarding payment and securities, settlement systems, payment services, payment institutions, and electronic money institutions.
Issuance of electronic money is established under Section 5 Article 20 in the Law no. 6439 on Payment Securities Settlement Systems, Payment Services, and Electronic Money Institutions. Article 20 sections 1, 2 and 3 define electronic money as one that is exchanged with assets (such as gold, banknotes etc.) and stipulates that transactions with electronic money are completely lawful. Although Cryptocurrencies are not specified under this law, there is no restriction on the usage of Cryptocurrencies either. Therefore, it is possible that Cryptocurrencies could fall within the scope of this law if it meets the criteria which are construed by the Law no. 6439. Nonetheless, Cryptocurrencies by their nature do not meet the criteria of the characteristics of electronic money at the law’s current position in the Republic of Turkey.
In regards to the regulation aspect of Cryptocurrency Activities, The Banking Regulation and Supervision Agency (BDDK), which is the body that protects the rights and benefits of depositors, guarantees the trust and stability in the financial market, issued a Press Release on 25 November 2013 regarding the most popular type of Cryptocurrency, Bitcoin. This press release stipulates that Bitcoin, which is the most utilized type of Cryptocurrency, does not fall under the criteria of electronic money provided in Law no. 6493 on Payment Securities Settlement Systems, Payment Services, and Electronic Money Institutions and for this reason cannot be audited or administered. However, there is no legislation specifically prohibiting Cryptocurrency and/or Cryptocurrency Activities regardless of the fact that Cryptocurrencies are not administrable.
Interestingly, Cryptocurrency derivatives exist and these are regulated by independent audit institutions which are appointed by authority. Derivatives are contracts in which individuals or companies can buy or sell. An example of this is BTC Turk which functions on a large scale in Turkey and it has not been prohibited from conducting Cryptocurrency Activities or penalized for doing so due to the fact that Cryptocurrencies are not criminalized under Turkish law.
Currently, the BDDK has provided an indication that Cryptocurrency does not fall within the scope of Law no. 6439 on Payment Securities Settlement Systems, Payment Services, and Electronic Money Institutions. There is currently no legislation that specifically refers to Cryptocurrency and therefore it is not entirely accurate to declare this type of business activity is lawful or unlawful in Turkey. Cryptocurrency is not recognized under Turkish law however they are utilized in Cryptocurrency Activities in practice.
Prepared by: Ali Güden and Doğa Girinti