Cryptocurrency, as mentioned in our previous article, is a subject that has not yet been regulated by law. However, by examining the relationship between cryptocurrency and foreclosure, we intend to reveal the necessity of regulation and how to proceed in the current situation.
Analysing the legal nature of cryptocurrency provides an important understanding in terms of attachment practices and methods. In the regulation issued in Turkey regarding the non-use of cryptocurrencies in payments (Regulation of the Central Bank of the Republic of Turkey dated 16 April 2021), crypto assets are described as intangible assets. Intangible assets are defined as assets that do not have a physical form in the legal sense, but have economic value and can be legally protected. Such assets do not qualify as commodities, money or goods. Although cryptocurrencies do not qualify as money, they have monetary value and are liable to seizure.
The reasons why cryptocurrencies are subject to seizure are as follows:
- Having monetary value,
Assets that have economic value can be seized through legal processes, and crypto-assets also acquire monetary value when they are subject to purchase and sale transactions. However, there is the issue of ownership, which is the other element of attachment. Although the guise of crypto money is not specified in terms of ownership, its belonging to the debtor can be determined due to situations such as being subject to trading transactions and the determinability of ownership.
- Not being among the goods that cannot be subject to seizure in Article 82 of the EBL.
Article 82 of the Enforcement and Bankruptcy Law describes the assets that cannot be subject to attachment. Since this article does not explicitly cover cryptocurrencies, it is concluded that cryptocurrencies will be seized without the need for a separate evaluation for the seizure of cryptocurrencies.
Seizure of Crypto Money:
For the seizure of cryptocurrencies, a seizure decision must be obtained by applying to the relevant court. The court decision must approve the seizure request of the person requesting the seizure of cryptocurrencies. The seizure application and the legal processes to be applied may vary depending on the type and storage method of the cryptocurrencies to be seized.
Cold Wallet:
Cold wallet refers to cryptocurrencies stored without an internet connection with a physical vehicle. Such wallets cannot be seized directly because they are offline.
The seizure of cryptocurrencies in cold wallets requires the control of private keys. Seizure can be carried out through the legal process, obtaining information about the contents of the wallet and legal claims against the owner of the wallet.
Hot Wallet:
Hot wallets are digital wallets that have an internet connection and can be accessed through online services.
The seizure of cryptocurrencies in hot wallets can be carried out directly through the cryptocurrency exchange or platform to which the wallet is connected. The seizure request is forwarded to the platform authorities and the cryptocurrencies in the relevant wallet are seized based on the court decision.
Cryptocurrency Platforms (Exchange or Wallet Service Providers):
Cryptocurrency platforms are online service providers where users can buy, sell or store their cryptocurrencies. The seizure of cryptocurrencies on cryptocurrency platforms can be carried out by applying to the platform authorities with a court order. Platforms can implement the seizure process in accordance with the legal processes, taking into account the court decision. Since it is the storage method with the least anonymity, we believe that it can be concluded more easily in foreclosure.
It can be said that the seizure of cryptocurrency, which is not prohibited under Turkish law, makes it difficult to implement the seizure process due to the legal nature of the cryptocurrency and its storage in the digital environment. However, it is a fact that if this process is managed with careful planning and in accordance with the characteristics of the cryptocurrency, the process will be successfully completed.