Introduction
Blockchain technology and Bitcoin, the most well-known
cryptocurrency, were launched by a person or group of people known
as Satoshi Nakamoto in 2009. While the real identity of Nakamoto
remains unknown, many other cryptocurrencies, such as Litecoin,
Ethereum and Dogecoin, have since been introduced.
Blockchain technology is the basis of all cryptocurrencies as it
allows them to operate without the need for a central
authority, referred to by Satoshi Nakamoto as: “…a new
electronic cash system that’s fully peer-to-peer, with no
trusted third party.”
As much as cryptocurrencies are new and thrilling, they also
bring new challenges since there is no consensus on how they should
be legally perceived.
On 13 April 2021, it was all over the news that Istanbul
14th Enforcement Office seized a debtor’s cryptocurrency
account that was worth 60,000 TRY1. This was the first
time this had happened in Turkey and, naturally, it raised a number
of questions.
Legal Status of Cryptocurrencies
Following the abovementioned seizure of the cryptocurrency
account by Istanbul 14th Enforcement Office, the debtor
objected stating that cryptocurrencies could not be seized. The
court responded that “cryptocurrencies should be considered
within the scope of commodities or securities, they were kind of a
digital currency or virtual money, and they could be
seized.”2
As cryptocurrencies are relatively new in our lives, how they
should be qualified is still controversial and even state bodies
have contradictory opinions on the matter.
At first, cryptocurrencies were categorized as electronic money,
which is defined under Article 3 of the Law on Payment and
Securities Settlement Systems, Payment Services and Electronic
Money Institutions no. 6493 as “a monetary value
which is issued upon receipt of funds by an electronic money
issuer, stored electronically, used to make payment transactions
defined under this law and accepted as a payment method by real and
legal persons other than the issuer”.
However, since issuers of electronic money must be authorized by
the Central Bank and such authorities do not issue
cryptocurrencies, they cannot be considered to be electronic money.
Indeed, in its decision dated 25 November 2013 and numbered
2013/32, the Banking Regulation and Supervision Agency
said: “Bitcoin, known as a virtual currency, is not
issued by any official or private institution and not guaranteed
for its equivalent, and due to its current structure and
functioning, it is not considered as electronic money within
the scope of the law, therefore, under the law in question,
surveillance and audit is not possible.”3
Article 3 of Capital Market Law no. 6362 defines securities
as “Except for 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.”
The Capital Markets Board has the authority to deem
cryptocurrencies as securities but is of the opinion that they
cannot be accepted as securities because they are fully digital and
are not based on, nor represent actual products. For this reason,
the court’s above-given opinion seems to contradict the
acceptance of the Capital Markets.
On the other hand, the court decision seems not to comply with
the views of either the Banking Regulation and Supervision Agency
or the Capital Markets Law on the legal status of
cryptocurrencies.
Another opinion is to perceive cryptocurrencies as commodities.
While there is no agreed definition of commodities, the Turkish
Language Association defines them as “all kinds of trade
items that can be bought and sold”. In the Turkish law
doctrine, commodities are defined as: “Things that are
material, have existence on their own and can be
dominated”4. As cryptocurrencies are not material
assets, the claim is that they cannot be perceived as commodities
and subjected to real rights5. In fact, it is stated
that in order for immaterial assets to be considered as
commodities, there must be an explicit regulation in the
law6.
Opposing views are also available in the doctrine. Based on
Article 1 of the Turkish Civil Code, it has been asserted that the
provisions on commodities can be applied to cryptocurrencies by
comparison to Article 762 of the said Law, which subjects certain
natural sources to movable property7.
Seizure of Third-Party Possessions
The Law of Enforcement and Bankruptcy no. 2004 (“Law No.
2004) enables a creditor to seize their debtor’s goods and
receivables that are in third parties’ possession. To give
examples, a debtor’s money in a bank account, the salary they
are entitled to, or their rent receivables may be seized.
Article 89 of Law No. 2004 regulates the seizure of third-party
possessions. Accordingly, the enforcement office seizes third-party
possessions upon a creditor’s request.
To do so, the enforcement office sends the third party a First
Notice of Seizure, informing the third party of the seizure of
receivables that they are due to pay to a debtor. The third party
must then either pay the debt to the enforcement office or notify
them within seven days that they are not indebted to the
debtor. The enforcement office assumes the receivables are in
the third party’s possession unless they object.
If the third party does not object, they are assumed to have
accepted the requested receivables and a Second Notice of Seizure
is sent, this time, notifying the third party that they must pay
the debt to the enforcement office, unless they object for the
reasons that were listed in the First Notice of Seizure.
If the third party neither pays nor objects, a Third Notice of
Seizure is sent notifying them either to make payment to the
enforcement office or file a negative declaratory action within 15
days, or they will be forced to pay.
Seizure of Cryptocurrency Accounts
There are many companies in Turkey that enable people to buy and
sell cryptocurrencies. Similarly, some of the big cryptocurrency
markets have offices in Turkey.
Therefore, as with banks, enforcement offices can send seizure
notices to these companies asking to seize a debtor’s
cryptocurrency account. As a matter of fact, this is exactly how
Turkey’s first “cryptocurrency account seizure” took
place. Accordingly, the operating company informed the account
owner by mail that following a notice from Istanbul
14th Enforcement Office the account had been suspended.
Regardless of the qualification of cryptocurrencies, they can be
seized as they undoubtedly have economic value. However, how the
receivables are collected varies depending on the qualification of
the cryptocurrencies. In Turkish enforcement law, the principle is
that the creditor is satisfied with money and the seized item
cannot be directly transferred to the creditor.
In all applicable scenarios, the cryptocurrency would have to be
deposited with the Enforcement Office.
If it is accepted to be money, either the Enforcement Office
must own a digital wallet, or the cryptocurrency must be deposited
into the Enforcement Office’s regular account after being
converted into (centralized) money.
If cryptocurrency is accepted to be a commodity or security, the
provisions on movable property seizure apply. Since Enforcement
Offices currently do not own digital wallets, it is suggested that
the relevant amount can, again, be deposited into the Enforcement
Office’s regular account after being converted to (centralized)
money
[8]. It should be remarked upon that according to the news, the
court that decided a cryptocurrency account could be seized on the
grounds that cryptocurrencies are within the scope of commodities
or securities ordered it to be converted into Turkish
liras9. As can be seen, the creditor is paid
(centralized) money in either case.
Conclusion
While the legal status of cryptocurrencies is yet to be
clarified, it is a fact that crypto markets attract many people
including big investors, and they are being traded more each
day.
Cryptocurrency accounts may be seized as explained, since they
undoubtedly have an economic value and are not restricted from such
practices. However, this legal gap as to the qualification of
cryptocurrencies triggers speculation and creates the risk of
inconsistencies in practice. For this reason, explicit regulations
must be made, and cryptocurrencies should be openly regulated.
Footnotes
1
https://www.hurriyet.com.tr/ekonomi/turkiyede-bir-ilk-kripto-paraya-haciz-geldi-41787082
2
https://www.diken.com.tr/menkul-kiymet-kabul-edildi-turkiyede-kripto-paralara-haciz-yolu-acildi/
3
https://www.bddk.org.tr/ContentBddk/dokuman/duyuru_0512_01.pdf
4 A. Lale Sirmen, “Eşya Hukuku”,
6th Edition, Ankara, 2018, p. 4
5 Berk K. Kapancı, “Özel Hukuk
Penceresinden Blokzincir: “Sanal Para” Değerleri ve
“Akıllı Sözleşmeler” Üzerine
Değerlendirmeler.” Gelişen Teknolojiler ve Hukuk I:
Blokzincir, 2020, p. 119
6 Gençer Özdemir, “Kripto
Paraların Eşya Niteliği”, SDÜHFD Vol. 11,
No: 1, 2021, p. 301-302
7 Fatih Bilgili/Fatih Cengil “Bitcoin
Özelinde Kripto Paraların Eşya Niteliği
Sorunu”, 2019, p. 18 and ff.
8 İlker Mete Özsoy, “Kripto Para
Varlıklarının Cebri İcra Yolu İle
Haczi” (Master’s Thesis, Başkent University, 2019),
p. 74
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.