Blockchain & Cryptocurrency Law

Blockchain technology is one of the most significant building blocks of the digital transformation, with the potential to revolutionize sectors ranging from finance and public services to land registry and healthcare. As Akdemir Legal, we navigate this evolving field to resolve legal uncertainties regarding the legal status of cryptocurrencies, the enforceability of smart contracts, and data protection.

What is Blockchain Law?

Blockchain law is a next-generation legal discipline that regulates the relationships, rights, obligations, and disputes arising from Distributed Ledger Technology (DLT). Due to the decentralized nature of the technology, it challenges traditional legal systems and seeks to define the legal status of digital assets.

Core Subjects of Blockchain Law:

• Legal qualification and regulation of cryptocurrencies.
• Validity and enforceability of Smart Contracts.
• Personal data protection (GDPR/KVKK) in decentralized systems.
• Ownership of NFTs (Non-Fungible Tokens) and digital assets.
• Regulation of ICOs (Initial Coin Offerings) and STOs (Security Token Offerings).
• Supervision and liabilities of cryptocurrency exchanges.
• Regulation and responsibilities of cryptocurrency exchanges.
• Taxation and financial reporting obligations

Blockchain law, lacking comprehensive legal regulations in most countries, is attempting to bridge the gap between existing legal systems and this new technology. This uncertainty creates significant risks and opportunities for both individuals and companies.

How Does Blockchain Work?

Blockchain is a distributed database system where information is recorded in encrypted blocks linked in a chain. It is defined by three pillars:

Decentralization: No central authority; data is stored simultaneously across all participants (nodes).

Immutability: Once recorded, data cannot be altered or deleted, ensuring the integrity of records.

Transparency & Privacy: All transactions are visible on the network, yet users can maintain anonymity through cryptographic addresses.

When a transaction occurs, it is communicated to all participants in the network and added to the blockchain with the approval of the majority. This verification mechanism is a fundamental element ensuring the security of the system.

Smart Contracts and Legal Validity

Smart contracts are digital protocols that execute automatically when predefined conditions are met.

Legal Challenges: Under the Turkish Code of Obligations, the validity of “intent” in a coded contract is a subject of debate. Issues such as code errors, the right of withdrawal in automated execution, and liability for damages require specialized legal assessment.

• How will defects of consent, such as error or fraud, be assessed in smart contracts?
• Who will be held responsible for damages resulting from coding errors?
• How will the automated execution of a smart contract affect the parties’ rights to withdraw from the contract?
• How will intervention be carried out if the content violates the principle of honesty?

Liability and Proof Issues: It is unclear who will be held responsible for problems that may arise in smart contracts. Will the developer who wrote the code, the parties using the contract, or the blockchain platform be held liable? There are also evidentiary law issues such as proving the declaration of intent and determining the content of the contract.

Kişisel Verilerin Korunması ve Blockchain Teknolojisi

There is a structural contradiction between blockchain technology and personal data protection legislation. Law No. 6698 on the Protection of Personal Data (KVKK) grants data owners the right to request the deletion, correction, or destruction of their data. However, the principle of immutability, a fundamental characteristic of blockchain, makes the exercise of these rights technically impossible.

Data Protection (KVKK/GDPR) Conflicts

• Right to be Forgotten: According to the Turkish Personal Data Protection Law (KVKK), data owners can request the deletion of their data. However, it is technically impossible to delete data recorded on the blockchain.
• The Data Controller Identification Problem: The Turkish Personal Data Protection Law (KVKK) requires that the data controller be clearly identified. In the decentralized structure of blockchain, the identity of the data controller is unclear.
• Explicit Consent: Explicit consent is required for the processing of personal data. How this consent is obtained and documented in blockchain systems is unclear.

Proposed Solutions: Several technical and legal approaches are being developed to address these problems. For example, solutions such as storing sensitive personal data outside the blockchain and only keeping hash values on the blockchain, using private blockchains, or updating the Turkish Personal Data Protection Law (KVKK) to be compatible with blockchain technology are being discussed.

Blockchain Technology in Land Registry, Patent and Notary Transactions

Blockchain technology has the potential to be used in many public services that require record-keeping reliability.

Blockchain in Property Transactions: Recording real estate ownership on a blockchain reduces the risk of fraud, lowers transaction costs, and shortens transaction times. Some countries (Georgia, Sweden, Dubai) have started pilot projects to transfer property records to a blockchain system. Although there is no official application in Türkiye yet, it is likely that the technology will be used in the future.

Patents and Intellectual Property Rights: Blockchain offers significant advantages in the registration, protection, and detection of infringements of intellectual property rights. The creation date and ownership of a work can be recorded on the blockchain, thus providing conclusive evidence in future disputes.

Blockchain in Notary Services: Smart contracts and blockchain-based notary services can offer an alternative to traditional notaries. The history, content, and identities of the parties to the contracts can be recorded transparently and immutably on the blockchain.

Cryptocurrency Law within the Context of Blockchain Technology

Cryptocurrency law is the most important and controversial subfield of blockchain law. The cryptocurrency revolution, which began with Bitcoin, has led to the emergence of thousands of different cryptocurrencies.

Legal Nature of Cryptocurrencies: The legal status of cryptocurrencies remains unclear. Whether they are commodities, securities, electronic money, or a new asset category is debatable. This uncertainty creates problems in many areas, including taxation, inheritance law, and bankruptcy law.

ICO and STO Regulations: Initial Coin Offerings (ICO) and Security Token Offerings (STO) are methods used by companies to raise funds by issuing cryptocurrencies. The question of whether these practices fall under capital market regulations is crucial.

Cryptocurrency Exchanges and Responsibilities: The legal status of cryptocurrency exchanges, the protection of customer assets, liability in hacking incidents, and anti-money laundering obligations are all issues requiring regulation.

Role of a Blockchain Lawyer

A blockchain lawyer acts as a bridge between innovation and regulation. Our services include:

Blockchain Avukatının Hizmetleri:

• Role of a Blockchain Lawyer
• Legal structuring of ICO/STO projects.
• Drafting and auditing blockchain-based commercial contracts.
• Ensuring KVKK/GDPR compliance for blockchain projects.
• Legal representation in cases of cryptocurrency fraud, hacking, or exchange disputes.
• Consulting on cryptocurrency taxation.
• Legal representation in cryptocurrency fraud and hacking cases.
• Advisory on NFT minting, sales, and intellectual property rights.
• Regulation of blockchain-based commercial contracts
• Double taxation and jurisdiction issues in international blockchain projects.

[/vc_column_text][vc_toggle title=”Are Cryptocurrencies Legal in Türkiye?” css=””]

Yes, they are legal to own and trade as investment assets. However, under current Central Bank regulations, they cannot be used directly or indirectly for payments in exchange for goods or services. There are no criminal sanctions for holding or trading crypto, provided the activities do not involve money laundering or financing of terrorism.

Ceza Kanunu’nun “suçta ve cezada kanunilik ilkesi” gereği, kripto para bulundurmanın veya ticaret yapmanın cezai bir yaptırımı bulunmamaktadır. Ancak kripto paralarla mal veya hizmet satın alınamaz, ödeme aracı olarak kullanılamaz.

Legal Status Assessment of Cryptocurrencies

The legal status of cryptocurrencies remains unclear under Turkish law.

Assessment as a Commodity: Cryptocurrencies cannot be considered commodities because they are not a physical asset and primarily function as a medium of exchange.

Assessment as Electronic Money: According to Law No. 6493, electronic money must be issued by an authorized institution. Since cryptocurrencies are not issued by a central authority, they do not meet the definition of electronic money. The Banking Regulation and Supervision Agency’s (BDDK) statement from 2013 also supports this view.

Menkul Kıymet Olarak Değerlendirme: Sermaye Piyasası Kanunu’ndaki menkul kıymet tanımına göre, kripto paralar ortaklık hakkı veya borçlanma aracı olmadığından menkul kıymet olarak nitelendirilemez.

Assessment as a Digital Asset: It seems most reasonable to consider cryptocurrencies as a sui generis (unique) category of digital asset.

Can cryptocurrencies be taxed?

The taxation of cryptocurrencies in Türkiye remains unclear. Because the legal status of cryptocurrencies has not been determined, it is also uncertain which type of tax they will be subject to.

Theoretically, gains from cryptocurrencies could be subject to income tax. However, this first requires determining the legal nature of cryptocurrencies. It is debatable under which article of the Income Tax Law they should be taxed (commercial income, income from movable capital, or other gains and income).

Countries around the world adopt different approaches. Some countries consider cryptocurrencies as assets and subject them to capital gains tax, while others consider them as goods and apply VAT.

Is Blockchain Technology Secure?

Blockchain technology is a highly secure system thanks to its cryptographic encryption and distributed structure. However, absolute security is not possible. While the system security is high, risks such as user errors, loss of private keys, and exchange hacks exist.

How are NFTs legally evaluated?

NFTs (Non-Fungible Tokens) are crypto tokens that represent ownership of unique digital assets. The legal status of NFTs is also unclear; they need to be evaluated from the perspectives of intellectual property law, property law, and contract law.

What are my legal rights in cryptocurrency fraud?

Kripto para yatırımlarında dolandırıcılık veya hack olaylarında mağdurların ceza davası açma, tazminat talep etme ve kripto para borsasından sorumluluğunu talep etme hakları bulunmaktadır. Ancak delil toplama ve fail tespiti genellikle zordur.