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 TRY. 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.”
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.”
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”. As cryptocurrencies are not material assets, the claim is that they cannot be perceived as commodities and subjected to real rights. In fact, it is stated that in order for immaterial assets to be considered as commodities, there must be an explicit regulation in the law.
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 property.
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. 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 liras. As can be seen, the creditor is paid (centralized) money in either case.
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.
 A. Lale Sirmen, “Eşya Hukuku”, 6th Edition, Ankara, 2018, p. 4
 Berk K. Kapancı, “Özel Hukuk Penceresinden Blokzincir: “Sanal Para” Değerleri ve “Akıllı Sözleşmeler” Üzerine Değerlendirmeler.” Gelişen Teknolojiler ve Hukuk I: Blokzincir, 2020, p. 119
 Gençer Özdemir, “Kripto Paraların Eşya Niteliği”, SDÜHFD Vol. 11, No: 1, 2021, p. 301-302
 Fatih Bilgili/Fatih Cengil “Bitcoin Özelinde Kripto Paraların Eşya Niteliği Sorunu”, 2019, p. 18 and ff.
 İlker Mete Özsoy, “Kripto Para Varlıklarının Cebri İcra Yolu İle Haczi” (Master’s Thesis, Başkent University, 2019), p. 74
Kemal Altuğ Özgün
Ayşe Gönen Anaeli