Ozturk and Sulungur: The regulation problem of cryptocurrencies

Published by Scholar Commons, 2020

 University of South Florida M3 Center Publishing

Co-Editors

Dr. Cihan Cobanoglu, University of South Florida, USA

Dr. Valentina Della Corte, University of Naples Federico II, Italy

ADVANCES IN GLOBAL SERVICES AND RETAIL MANAGEMENT: VOLUME 2

ISBN 978-1-955833-03-5

*Authors are fully responsible for corrections of any typographical, copyrighted materials,
technical and content errors.

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DOI: https://www.doi.org/10.5038/9781955833035
 Ozturk and Sulungur: The regulation problem of cryptocurrencies

Co-Editors

Dr. Cihan Cobanoglu, University of South Florida, USA

Dr. Valentina Della Corte, University of Naples Federico II, Italy

ISBN 978-1-955833-03-5

© USF M3 Publishing 2021

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Associate Editor

Dr. Seden Dogan, Ondokuz Mayis University, Turkey

Dr. Muhittin Cavusoglu, Northern Arizona University, USA

Assistant Editor

Dr. Faizan Ali, University of South Florida, USA

Dr. Resat Arica, Adiyaman University, Turkey
Dr. Alaattin Basoda, Aksaray University, Turkey
Dr. Lisa Cain, Florida International University, USA
Dr. Giovanna Del Gaudio, University of Naples Federico II, Italy
Dr. Rab-Nawaz Lodhi, University of Central Punjab, Pakistan
Dr. Bendegul Okumus, University of Central Florida, USA
Dr. Antonella Miletti, University of Naples Federico II, Italy
Dr. Gozde Turktarhan, University of South Florida, USA

Editor Assistants

Ipek Itır Can, Anadolu University, Turkey

Filiz Dalkilic Yilmaz, Nevsehir Haci Bektas University, Turkey
Eda Hazarhun, Dokuz Eylul University, Turkey
Gamze Kaya, Mersin University, Turkey
Oguz Kiper, Sakarya Applied Sciences University, Turkey
Basak Ozyurt, Trakya University, Turkey
Gokhan Sener, Necmettin Erbakan University, Turkey

*Authors are fully responsible for corrections of any typographical, copyrighted materials,
technical and content errors.

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 Ozturk and Sulungur: The regulation problem of cryptocurrencies

The Regulation Problem of Cryptocurrencies

Lamiha Öztürk1 and Ece Sülüngür2
1
Faculty of Economics, Administrative and Social Sciences
Hasan Kalyoncu University, Turkey
2
Faculty of Law
Ufuk University, Turkey

Abstract

The purpose of this article is to analyze the difficulties associated with the lack of regulations in
cryptocurrencies. Indeed, the absence of a uniform and international common regulation brings
many legal conflicts. This lack of legal framework partly slows down the development of
cryptocurrencies. Investors who wish to invest in this type of currency or asset are often
discouraged due to the lack of legal framework. In order to highlight the difficulties caused by
the lack of regulation, this paper proposes to analyze the different approaches and the beginning
of a legal text developed by certain countries to respond to these difficulties. Cryptocurrencies,
although they have their own strengths, are trying to integrate into the classic monetary system.
Cryptocurrencies are the fruit and results of a new technology that has been developing at high
speed since 2010. However, there are many obstacles to the development of the blockchain
ecosystem. Many countries do not want to miss the blockchain revolution but remain skeptical in
its applications and dissemination. Beyond cryptocurrencies, creating a legal environment
favorable to the development of this new technology will allow the distribution of crypto-assets
which are a fundamental economic stake for countries wishing to perpetuate their financial
attractiveness.

Keywords: blockchain, crypto currency, regulation, crypto-asset, international finance

regulation

Recommended Citation: Ozturk, L., & Sulungur, E. (2021). The regulation problem of
cryptocurrencies. In C. Cobanoglu, & V. Della Corte (Eds.), Advances in global services and
retail management (pp. 1–12). USF M3 Publishing.
https://www.doi.org/10.5038/9781955833035

Introduction

Digitization is one of the consequences of technological development. This digitization has also
affected the monetary system. The development of cryptocurrency is revealing of this craze for
the digital world (Alnıaçık, 2019). Access to cryptocurrency from anywhere and especially at
any time of the day is one of the main factors for the success of this new technology. Financial
institutions aware of these advantages have implemented a whole series of measures facilitating
access to cryptocurrency (Alnıaçık, 2019). The success of cryptocurrencies can also be explained
by the use of an extremely secure technological medium (Kaplanhan, 2018). The use of a
mathematical coding basis currently ensures the security of cryptocurrency (Nakamoto, 2008). In
other words, cryptocurrency is a unit of digital and virtual currency that uses cryptography
(Kaplanhan, 2018). Paradoxically, a number of investors opt for cryptocurrencies due to the total

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absence of central governance, while other investors consider this lack of supervision to be a
brake on the development of cryptocurrency. The cryptocurrency known to the general public
and which has highlighted the strengths of blockchain technology is undoubtedly bitcoin. This
cryptocurrency was presented to the public in 2008 in an article entitled "Bitcoin: A Peer-to-Peer
Electronic Cash System" authored by a certain Satoshi Nakamoto (Karakaş, 2018). Bitcoin is not
the only crypto currency that exists in the financial system. However, digital security and the
simplicity of transactions seem to be one of the reasons why bitcoin has appealed to investors,
individuals and the monetary system as a whole.

Advantages and Disadvantages

When Satoshi Nakamoto presents in his article this cryptocurrency that he calls Bitcoin, he
highlights the advantages of using this new technology which is the blockchain. This
cryptocurrency, which therefore has no physical support, is devoid of any regulation, not being
attached to any governance or central bank and therefore escapes all regulation. The abbreviation
proposed by Nakamoto (2008) for this new cryptocurrency is: “BTC”. The reliability of the
system is put forward as a positive argument for cryptocurrencies. Indeed, for those who are
raving about cryptocurrencies, the use of cryptography and mathematical algorithms is a
guarantee of a safe transaction and at a lower cost. The low transaction costs combined with the
viability and speed of the transaction; it seems that cryptocurrencies have a certain future. The
anonymous nature of the transaction also assures all those who would like their transactions to be
made in the utmost secrecy. Each approved and valid transaction is added to the data already
existing in the system (Çarkacıoğlu, 2016). The digital platform that uses blockchain technology
has internal memory and records every transaction carried out there (Çarkacıoğlu, 2016). The
transparency and accessibility offered by blockchain technology is another factor in its success.
However, the traceability of transactions is almost impossible which results in many legal
problems in the event of disputes or non-compliance with the contract.

Caentano (2015) in this work stipulate that all people who own bitcoins are obliged to keep their
cryptocurrency in a wallet. There are currently four types of wallets. These are the online,
desktop, mobile and hardware wallet (Caentano, 2015). These four wallets are classified into hot
and cold wallets according to the internet connection speed. Caentano (2015) describes these
four portfolios as follows: The online wallet as its name suggests is a wallet accessed through a
web browser or mobile application. Desktop wallets are directly connected to the bitcoin network
and for this reason people could have more control over the system, but this also presents a risk,
people who use this type of wallet should save their transaction if they do not want to lose them
in the event of technical problems. Mobile wallets are wallets present directly on the user's
mobile phone through various applications that allow access. The Hardware Wallet, seems to be
one of the most secure as they are often stored in “classic” hard drives such as USB sticks. This
ensures that its owner has access to their cryptocurrencies at all times, even if there is no internet
connection. This is why the hardware wallet is classified in the cold category.

System Under Cryptocurrencies: Blockchain Technology

Blockchain technology has experienced spectacular success and growth in recent years. For
Belotti et al. (2019) this new technology is a source of significant opportunity, whether in the
economic, banking or financial field. But not only according to Belotti et al. (2019) this also

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represents a source of job creation and opportunity for added value for IT companies. Gai et al.
(2020) describe blockchain technology as the backbone of the internet of the future. For these
authors it is certain that this emerging technology will durably disrupt the entire web
infrastructure.

Blockchain technology is a data structure that combines blocks into a chain (Nakamoto, 2019).
As a result, the simplicity of its structure ensures systematic system verification and data storage
service in a fully hierarchical fashion (Kim et al. 2020). The use of cryptography also ensures
that data is not tampered with (Kim et al, 2020).

Blockchain technology is being tackled as one of the disruptive technologies that are expected to
affect next generation web usage habits (Yang et al. 2021). Beyond cryptocurrencies the field of
application of blockchain technology seems to be endless. Since in the context of cyber
protection, disaster management, post-market compensation, arbitration, mediation (AMF, 2017)
supply chain responsibility, trade finance, securities registers, payment processing, credit
processing, correspondence and paper verification (Hawaii House of Representatives, 2015) are
just a few of the areas where blockchain could be used (Blemus, 2017). Each cryptocurrency
could also use its own blockchain for its transactions.

The decentralized payment system implemented modern blockchain implementations as well as

additional features that made it possible to distribute small pieces of code directly on the
blockchain and execute in a decentralized manner by all nodes in the network (De Filippi and
Hassan, 2016).

Smart contracts are a term used to describe certain types of agreements (SC) because they allow
people to enter into contractual relationships with other people (or machines) through a simple
blockchain transaction. The goal of smart contracts is to mimic the logic of contractual clauses
(De Filippi and Hassan, 2016). This computer application that facilitates contract negotiation,
validates and enforces contract compliance, or eliminates the need for a separate binding
agreement between the parties. Smart contracts, in reality, can use built-in compliance
mechanisms to automatically implement the terms of a contract and include unstable transactions
(Szabo, 1997; De Filippi and Hassan, 2016). Within the same blockchain ecosystem, smart
contracts can interact with humans and other smart contracts (e.g. Ethereum).

A complex series of smart contracts can be generated in certain situations, allowing various
parties to communicate with each other. A decentralized autonomous organization (or DAO) is a
smart contract system that is autonomous and governed by an unbreakable set of rules, which is
only enforced in the form of a SC (De Filippi and Hassan 2016; De Filippi and Wright, 2015).
This DAO is "decentralized" in the sense that it is not governed by anyone or by any legal entity;
it is “autonomous” (Rodrigues, 2018).

In the context of blockchain technology, miners are the ones who approve and validate
transactions. The frequency of these validations is approximately every 10 minutes. In other
words, a number of blocks accumulate in a chain and this accumulation is ultimately validated by
a miner. This validation is carried out via the resolution of the complex mathematical problem,
the first minor that solves the problem validates the transaction (Alnıaçık, 2019). Therefore, each
cryptocurrency transaction accumulates in the chain and once valid cannot be reversed

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(Kakavand et al. 2017). Once the transaction is validated, the information is stored and recorded
in the databases and its dissemination is immediate and transparent (Alnıaçık, 2019). From a
legal point of view, the US federal regulator responsible for the security and soundness of US
national banks, the Office of Comptroller of the Currency ("OCC") published in March 2016 the
very first guide dedicated to the blockchain technology and cryptocurrencies (Cermeño, 2016).

Distributed ledger technology is listed in this report as a technical advancement that "has the
potential to transform the way transactions are processed and executed" (OCC, 2016).
Additionally, in December 2016, the US Federal Reserve's (FED) Business Department Research
and Statistics and Monetary published an article on Distributed Ledger Technologies (FED,
2016). According to the Federal Reserve's report, blockchain technology offers "potential
opportunities" in the areas of payment, commerce and payments, in particular "a new [asset
independent] medium of storage, registration and transfer [ of any type] of digital
assets”(Blemus, 2017).

The Place of Cryptocurrencies in Legal Systems

This new technology also brings many questions to which it is important to provide clear and
precise answers quickly, otherwise the craze for this new technology may become ephemeral.
Cryptocurrencies are accepted by a number of merchant and other financial institutions. But what
is the legal framework for these cryptocurrencies? Do institutions that accept cryptocurrencies
offer legal guarantees? Why are some countries banning the use of cryptocurrencies? And why
are other countries trying to create their own cryptocurrencies?

In short, each country has different approaches to cryptocurrencies and this can help to
understand the legal issues that cryptocurrencies bring and the solutions being considered or
imagined by states to address them.

The advantages offered by blockchain technology are important, but a number of disadvantages
are also a field of discussion to which lawyers have not yet found a solution. Cryptocurrencies
for example provide an environment conducive to a considerable number of crimes including
internationally sensitive issues such as money laundering, terrorist financing, tax evasion and
many illegal activities (Narayanan et al. 2016). The anonymity of the transaction and the absence
of any regulator and mediator exposes financial markets that accept transactions through
cryptocurrencies to a number of illegal activities (Durdu, 2018). Are cryptocurrencies full-
fledged currencies? Goods? Or a piece of equipment for the international financial system?

Remember that money is a medium of exchange, a unit of value and a store of value (Krugman
and Wells, 2012). So, one of the questions is, do cryptocurrencies perform all three of these
functions? According to Alnıaçık (2019) cryptocurrencies in particular Bitcoin is not a store of
value because the means of store of value are used as a guarantee of security by financial
institutions and this prospect seems remote for bitcoin.

At the same time, some countries consider (due to their jurisdiction) cryptocurrencies as a
commodity. There is also the question of the competent institutions and courts in the event of
litigation. Different jurisdictions bring different rights to fellow citizens creating uncertainty
about cryptocurrencies internationally.

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Virtual currencies are regulated at the federal and state levels in the United States. He focused on
many different compliance topics at the federal level (Blemus, 2017). The Financial Crimes
Enforcement Network ("FinCEN") released the first US federal statement on virtual currencies in
March 2013, along with an interpretive guide to explain the scope of US bank secrecy law to
"convertible virtual currencies" (FinCEN, 2013; Cermeño, 2016). According to FinCEN, certain
convertible virtual currencies (such as Bitcoin) considered to be “valuable” must be accepted and
transmitted in accordance with US money laundering regulations. The Internal Revenue Service
(“IRS”), a US federal financial agency, issued a notification on virtual currency in March 2014.
The reported position of the IRS remains constant (IRS, 2014). Additionally, "cryptocurrencies
will be treated as property for federal tax purposes," according to the US federal tax institution.
New York State was the first to introduce a systematic system. In June 2015, the New York State
Department of Financial Services (NYDFS) finalized “BitLicense,” (Guégan and Sotiropoulou,
2017) a set of special licensing rules dedicated to virtual currency operations. It is therefore
important to obtain a special license from NYDFS, namely BitLicense, in order to submit an
application which must meet a set of criteria (such as anti-money laundering, cybersecurity, etc.).

Since 2012, European organizations have engaged in a similar mechanism to address this issue at
regional level in the European Union. The European Central Bank ("ECB") shared its statement
on cryptocurrencies in October 2012 that it is "a type of unregulated digital currency, which is
issued and generally controlled by its developers, and used among members of a specific virtual
community” (ECB, 2012). This ECB report, together with a comment from the European
Banking Authority (“EBA”) in December 2013 and an EBA opinion to European institutions and
national regulators published in January 2014, both called for a long-term holistic virtual
approach with the aim of developing a currency regulation strategy (EBA, 2013). The EBA has
cast doubts on the economic gains of the cryptocurrency and noted many possible threats. As the
new regulatory mechanism would inevitably take time, EBA urged EU lawmakers and regulators
to take urgent short-term action, including declaring players in the virtual currency market, such
as virtual currency exchange platforms and depository wallet providers, such as "obligated
institutions" which are subject to the EU Anti-Money Laundering Directive (Blemus, 2017). In a
political environment dominated by terrorist threats, the European Commission (“EC”) accepted
the EBA proposal in July 2016, recommending the extension of the scope of the EU's Fourth
Anti-Money Laundering Directive (“LBC”) No. 2015/849 to cover market players in virtual
currencies (EC, 2015). The EC presented a classification of “virtual currencies” which was
similar to the EBA's 2014 opinion “virtual currencies refer to a digital representation of value
that is neither issued by a central bank or public authority, nor necessarily attached to fiat
currency, but is accepted by natural or legal persons as a means of payment and can be
transferred, stored or exchanged electronically "(Blemus, 2017). In October 2015, the judicial
institution of the European Union a taken the most important step towards regulating virtual
currency in the EU. The EU Court of Justice has consolidated the views of EU member states on
value, eliminating legal uncertainty. Previously, several EU members states had adopted various
approaches to the treatment of value added tax (or VAT) for virtual currencies. In addition, this
decision was translated to apply to all virtual currencies, pa s only to bitcoin (Rose Norton,
2015). In December 2013, the French Central Bank (Banque Centrale Française), the conversion
of a virtual currency into legal tender must be considered as an offer of financial facilities which
require a specific agreement with a payment institution (Blemus, 2017). Vondrackova (2016)
recommends a clarification of the terminology, otherwise within the framework of the European
legislation difficulties of interpretation may appear. The French central bank changed its position

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somewhat in 2016, calling virtual currencies a “parallel mechanism of money creation” (Banque
de France, 2016). After 2017, the current French presidency appears to be taking a more
balanced approach to bitcoin, with the Ministry of Economy and Finance issuing a statement in
October 2017 classifying bitcoin, dubbed the “first decentralized electronic monetary currency”
in the report, as an alternative payment method for the first time (French Ministry of the
Economy and Finance, 2017).

It seems that a standardization of the legal bases governing cryptocurrencies is a necessity for the
sustainability of these virtual currencies. At present the different regulations and legal bases are
confusing for those who wish to invest in cryptocurrencies. For example, a new regulation that
came into force on April 16, 2021 prohibits transactions in crypto assets in Turkey (RG, N:
31456, 04.16.2021). The absence of any taxation on crypto assets seems to be the main
motivation for this new regulation. It is obvious that in the long term all countries will harmonize
their jurisdictions in order to integrate these cryptocurrencies and assets into a regulatory circle
in order to tax these transactions and these gains and specially to fight against money laundering,
terrorist financing and tax evasion.

Cryptocurrencies as a Subject of Tax Law

Some countries consider cryptocurrencies to fall under tax law and therefore should be
incorporated into tax legal texts. The tax rate also varies from country to country for those who
have taxed these crypto assets. For example, Argentina believes that the absence of any regulator
is an obstacle to the legalization of cryptocurrencies. Argentina therefore does not consider
cryptocurrencies to be legal currencies, yet its inhabitants are not completely hostile to the use of
these cryptocurrencies. Argentina refusing to consider cryptocurrencies as legal currencies has
decided to regulate cryptocurrency transactions through the rules of commodity sales
(Cryptocurrency Regulation Report, 2018). The cryptocurrency regulation report released by
Argentina’s financial authorities highlights their concerns about money laundering and anti-
terrorist financing issues and has put in place a system for reporting suspects or suspicious
transactions. In order to fight tax evasion Argentina has also implemented a tax system applied to
crypto assets (Cryptocurrency Regulation Report, 2018). Besides Argentina, Israel considers
virtual currencies a subject of capital gains tax.

Money Laundering and Terrorist Financing in Cryptocurrency

The characteristics of cryptocurrencies easily form a basis for money laundering. First, you have
to describe what money laundering is. Money laundering is a crime and in order to qualify as a
crime, the act (in other words the commission of the crime) must take place. Once the crime has
been committed there must be economic gain in value and this illegal gain must be intercepted
(Karakaş, 2018). According to a study carried out by Fanusie and Robinson (2018) about 1% of
transactions carried out in the context of the transfer or acquisition of Bitcoin are carried out
within the framework of an illegal activity (in particular money laundering) (Fanusie and
Robinson, 2018). The anonymity that surrounds transactions via blockchain technologies,
combined with the absence of any supervision and any regulator / administrators / mediator,
make it difficult to dismantle this type of malicious network.

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Some countries that recognize or at least do not restrict cryptocurrencies have integrated these
cryptocurrencies into their anti-money laundering and anti-terrorist financing regulations. Some
countries like Australia are tempted to incorporate the legal bases of cryptocurrencies into both
tax laws, anti-money laundering regulations and the fight against terrorist financing. But just as
the Senate Committee pointed out, it is important to avoid double taxation that could result from
transactions in crypto assets and cryptocurrencies (Cryptocurrency Regulation Report, 2018).

Canada, which has a positive approach to cryptocurrency and assets, does not recognize
cryptocurrencies as a means of payment. Indeed, according to the Canada Revenue Agency,
transactions related to cryptocurrency are barter transactions (Cryptocurrency Regulation Report,
2018). Since 2014, the regulations consider cryptocurrency as “money service business”. All
companies that carry out cryptocurrency transactions must on the one hand “keep and keep
records” and on the other hand register with the Financial Transactions and Reports Analysis
Center of Canada (Fintrac) (Duhaime, 2014).

Apart from the EU and the United States, the positions of regulators have so far been extremely
diverse across the world. Several developed countries - such as India (Government of India,
Ministry of Finance, 2017) - are forming expert and / or intergovernmental commissions to
review the regulatory system for virtual currencies, or have expressed political will to enact a law
on cryptocurrency and mining operations (Financial Times, 2017). In addition, a growing
number of countries, such as Australia (Australian Senate Legal and Constitutional Affairs
Legislation Committee, 2017), Canada (Statues of Canada 2014) and Singapore (Monetary
Authority of Singapore, 2014), provide virtual mediators in convertible currencies under anti-
money laundering regulatory regimes to provide greater legal clarity in transactions involving
such assets. International institutions, on the other hand, have taken a different position. The
Bank for International Settlements (“BIS”) published a report in 2015 claiming that “digital
currencies could reduce the role of central banks” (Bank for International Settlements, 2015), but
has since authorized the publication of reports advocating that central banks create
cryptocurrencies (Bech and Garratt, 2017). Unlike the BIS, the International Monetary Fund
(“IMF”) has supported the development of cryptocurrencies in some of its official reports and
speeches since 2016 (IMF Staff Discussion Note, 2016; Adriano and Monroe, 2016; Lagarde,
2017). As previously mentioned, the tax treatment of virtual currency transactions regularly
discussed would be subject to capital gains tax in Israel (PerkinsCoie LLP, 2017; Piper, 2017).

Some countries like Switzerland approach virtual currencies as a property. The Swiss
government has published a report on virtual currencies which describes the economic issue,
legal treatment and risks. According to this report, virtual currencies are not considered legal
tender when they have a role like money instead, they consider them as property (Federal
Council Report, 2014). Cited above the risks of cryptocurrencies as money laundering, terrorist
financing and adding investor protection The Swiss Federal Council takes these risks into
account and warns them against them, but also, it warns focus on the benefits and new
technologies that accompany virtual currencies. In short, Switzerland assesses the pros and cons
of virtual currencies and warns of the risks. About the regulations on money laundering; in
Switzerland, they apply the anti-money laundering law for those who accept deposit assets or aid
for professional investment from third parties or the transfer of such assets in this regard, virtual
currencies are generally covered by this law (Geldwaschereigesetz, 1997). Recently they have
started to accept bitcoin as an administrative fee payment and they have accepted bitcoin as a tax

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payment. Belarusian law allows people to buy, sell and trade the cryptocurrencies that this
approach presents with the presidential decree and this effect also regulates taxation, exchange
control and transactions with cryptocurrencies (Cryptocurrency Regulation Report, 2018).

Regarding the taxation of cryptocurrencies in Belarus, the presidential decree applies exempt
from income tax. This decree also exempts value added tax for the sale of tokens (RG, RU,
2017). These tokens are not considered taxable income. On anti-money laundering regulation,
the National Bank of Belarus has regulated this topic and brings the extension for crypto
platform operators and cryptocurrency exchange operators, those- ci are treated as a high-risk
customer and are classified among lottery and casino game operators (RG, RU, 2018). Other
countries such as Bangladesh (the Telegraph, 2014) or Vietnam (The State Bank of Vietnam,
2017) are rather resistant to cryptocurrencies and assets. But it is quite possible that these two
countries will change their approach in the medium to long term. Indeed, with regard to the flow
of transactions and the gains in value, the economic and financial stake can prove to be crucial.
China as an example which did not recognize cryptocurrencies (in order to protect their investors
and minimize the risks of money laundering and tax evasion) is preparing to launch its own
cryptocurrency on the financial markets (Xiaochuan, 2018). Some governments view
cryptocurrency as a currency and others as a commodity (Peters et al. 2015). But it is certain that
this new technology has attracted the attention and interest of all financial and political actors.

Some countries pay more attention to the drawbacks in an effort to protect their investors and
their economies but even the latter mostly end up creating their own cryptocurrency. The
creation of cryptocurrency by the legal authorities (Central Bank etc.) is perhaps a solution to the
absence of a regulator. But it is not guaranteed that these cryptocurrencies created under the
effigy of a bank or central authority will be well received by current users of cryptocurrencies.

Turkey's Approaches to Cryptocurrencies

To understand Turkey's approaches to cryptocurrency, one must first understand the

cryptocurrency statue, is it considered a means of payment, a commodity, or other things?

In terms of Turkish criminal law there is no particular regulation for cryptocurrencies, but some
criminal actions under criminal law could cover cryptocurrencies as some of these crimes could
be committed with the use of crypto. -currencies and for this reason, criminal law might have an
area of applicability. There are two points that are important; counterfeiting and money
laundering. Apart from counterfeiting money there should be money to commit the crime it is the
material element and the Turkish penal code lists what is considered a currency and in these lists
the cryptocurrencies are not considered a subject of the crime of counterfeiting money because
they do not meet the definition of equal currency or materials in the penal code (Durdu, 2018).

Like all other countries, Turkey does not have a common opinion on cryptocurrencies and their
legal status is uncertain. The Banking Regulatory and Supervision Agency has a statement
regarding bitcoins, they said bitcoins could not be considered electronic money because the
structure of bitcoin was not included in the scope of regulations which regulated the subject
(Durdu, 2018). According to a statement published in 2013 in an official letter from the Banking
Regulation and Supervision Agency (BDDK), "Bitcoin is not considered electronic money within
the limits of the law due to its nature and its current operation "and" it is not considered possible

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to supervise and control it within the framework of the law". The inability to identify the identity
of those involved in Bitcoin and other virtual currency transactions provides an ideal
environment for their use in illegal activities. In addition, Bitcoin is vulnerable to threats such as
too unpredictable market valuation, theft, destruction or misuse of digital wallets without the
owners' knowledge, as well as technical failures due to irreversibility of transactions. or violence
from malicious sellers, according to the BDDK statement. (BDDK, 2013). For this reason,
Turkey's approaches to cryptocurrency are situation dependent and there are no regulations that
restrict cryptocurrencies or certain considerations and allow. Girasa (2018) notes “that new
methodologies are being developed to allow government entities to bypass secret private keys
used by customers of virtual currencies”.

Conclusion

After reviewing the approach of different countries, it seems that one of the main advantages
advocated by defendants of the blockchain ecosystem is confusing. Indeed, the absence of any
supervision discourages people and states that are averse to risk. The blockchain ecosystem
based on cryptographic technology associates the user and therefore the principal in the issuance
process of this cryptocurrency (Chohan, 2017). This decentralization, which is one of the factors
of its success, may turn out to be the reason for its decline. Indeed, we see that states that believe
in the future of cryptocurrencies end up adopting their own cryptocurrency. The success of
"State" cryptocurrencies (that is, created by a central bank or any other federal institution) is not
guaranteed. It is possible, as the report of the Directorate-General for Enterprises (2021)
suggests, to set up lock systems. This system of locks could be under the control of a legal
regulator such as the Central Bank. The risks associated with cryptography seem to be almost
identical for each country and yet there is a heterogeneity of practices, particularly at the tax
level. All countries agree to report the risk of money laundering and terrorist financing, but they
disagree on the very definition of crypto assets. It is therefore vital to give a clear and precise
definition of cryptocurrencies and assets for a standardization and internationalization of
regulations in terms of blockchain technology. A shared common definition seems to be the
crucial starting point for international regulation. In addition, the fiscal policy that will be
adopted by the countries seems to be a factor that will positively or negatively influence the
development of this new technology in the financial field.

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