A New Challenge for Financial Security: “CRYPTOCURRENCIES”

SUMMARY

The concept of money in economic life has undergone changes in the historical process depending on the developments in social life, and after the barter economy, it started to be used primarily as a means of exchange. Money, which was later used as a unit of account and a store of value, has taken on a completely different identity as an investment instrument today. Thanks to the technological changes in human life and the ever-increasing speed of use of the internet in economic and social life, “cryptocurrency” has started to be used as a new type whose theoretical definition has not been finalized. Due to the harmful effects of this financial system, which cannot be controlled and supervised by any center due to its dependence, such as the formation of an authority vacuum and the elimination of seigniorage revenue, it has become a serious problem that states need to find solutions. In the current study, ideas have been expressed in the light of theoretical evaluations in order to make the cryptocurrency system, which is rapidly increasing in prevalence in a way that erodes financial security, into a controllable structure. Concrete ideas on how Turkey, which ranks fourth in the world in the level of cryptocurrency transactions, should follow a path regarding its legal structuring within the framework of inter-country comparisons have been stated.

Keywords: Financial security, Taxation, Money, Cryptocurrency, Blockchain

I. Introduction

Money, whose use in the historical process dates back to ancient times, firstly met the need as the basic means of exchange in social and economic life, and in the following processes, it started to be used as a savings and investment-based accumulation tool. Money, which was an important material for past civilizations to gain prestige over the lands and populations they dominated, was also seen as a symbol of independence and power by state administrations. After the coin, paper, electronic and digital uses of money, whose usage area changes day by day with technological movements, it has started to be used in the form of cryptocurrency. Cryptocurrency, which has been used by abstracting from the basic features that have been used since the first times it was created, causes the power of states to be questioned due to the fact that it eliminates the chance of Central Banks to intervene due to its increasing dominant power in the markets.

Trade, which is accepted as the source of wealth, and money, which is the means of its realization, are considered as an integral part of economic security in the national and international arena. In this sense, there are many reservations about cryptocurrencies, which have a new field of use in economic life. It is stated that there are major drawbacks in accepting cryptocurrencies as money for reasons such as the lack of physical reality, the absence of a state power behind them, the absence of any metal or value that must be held in return, and their extremely volatile value. Nevertheless, cryptocurrencies are a reality whose existence and demand is increasing day by day in today’s conventional finance structure. However, there is no obstacle to cryptocurrencies, which are not accepted in their current form, becoming a more stable instrument as an indispensable argument of the future financial structure. For this reason, the existence of cryptocurrencies belonging to countries may become a sine qua non of the financial market as an indicator of the dominance of countries in the digital field in the future.

In this study, first of all, the structural features of money, whose use dates back to ancient times, will be explained in the conceptual framework and the process until cryptocurrencies will be briefly mentioned. Afterwards, information on the basic usage area and the emergence process of cryptocurrencies, whose use is becoming widespread day by day, will be presented. After giving information about the evaluations of cryptocurrencies in terms of Islamic law and taxation, we will try to reach a conclusion by putting forward our own thoughts. The current study is mostly aimed at explaining the conceptual analysis of theoretical-based applications. The main objective is to contribute to today’s economic structure where states are trying to find solutions due to the spread of cryptocurrency technology. It is thought that our subjective views on the structure of cryptocurrency technology, which continues to increase its presence in the financial structure, are important in terms of adding value to the institutional studies to be carried out in this context.

II. Money in Historical and Conceptual Perspective

Due to the diversification of needs in societies that have moved from individual lives to living together, it has become impossible for individuals to meet all the goods and services they need by themselves. For this reason, in the course of the historical process, needs were met through division of labor and barter, and as communities increased and needs diversified, this task became more difficult. In addition, disagreements arose due to the fact that the parties to the exchange were not convinced of the equivalence of the goods to be exchanged and their quantities, and that not all goods were divisible. In this respect, money emerged as a means of exchange on an economic basis. When we look at the concept of money as a term, it is seen that it is accepted as “a tool that facilitates the value and exchange of goods and services created in economic life or payments based on borrowing”. The term “nakd” in Arabic, similar to the term “cash” in Turkish, is used as the equivalent of the concept of money and is accepted as the symbol of the measure of value (Güney, 2020: pp. 32-33).

Due to the difficulties experienced in meeting the needs of individuals in barter economies, some payment instruments suitable for the definition of goods-money have started to be used between people over time. Products such as animal skins, salt, wheat, pearls, pearls, coconuts, dates, and shells, which were preferred in accordance with the conditions and possibilities of the region in which they were used, were used as tools for economic exchanges between people. However, the use of coins has become a necessity due to the difficulties in establishing standards, storing, transporting, paying in installments and counterfeiting (Orman, 2015: pp.25).

Money has been seen as the main source in terms of reflecting the financial structures and economic indicators of states, and the first use of coins has a historical process dating back to the Lydians. The money invented by the Lydians, a society that lived in Anatolia in the 7th century BC, is a very important invention that overcomes the difficulties experienced in exchange in commercial and social life. Because it was seen that individuals, who had to find someone who needed the goods they had in order to acquire goods, started to make their transactions more easily with a material to be used as a unit that measures the real value of labor and production from the barter system with the invention of money (www.isbank.com.tr).

In terms of their formal structure, the first coins minted as coins also indicated a symbolic structure showing who was in authority. For this reason, this situation also came to the fore in the rapid transition of civilizations to coinage. Because it was also seen as an informative element in terms of showing other societies who the kingdom or empire was as the sovereign power in the lands and communities they dominated. A coin with the image and name of the sovereign of the lands was seen as an indicator of the possession of large territories and the borders of sovereignty, and with this structure, it was also accepted as a means of communication (Canbaz and Berkun, 2021: p.100)

The reason for the emergence of the use of paper money was the Chinese ruler’s (Song Dynasty) concern that the use of silver and gold in commercial relations would reduce the state treasury and that this would reduce the power of the state. In addition to this, the difficulties experienced in the safe custody of the money owned, and the increase in transportation and utilization difficulties in case of a large amount of assets owned are accepted as the main reasons. The use of paper money, which is so old in the East, was accepted by Western societies in the 17th century and it is known that it was produced by the Massachusetts Government in the USA in 1690 and by the money changers in England. Sarrafs in England, in exchange for the minerals left in their custody, gave a document that could not be used for the purchase of goods, but which provided security, preservation and ease of transportation to its owner, and which was initially written in name and then in bearer, which is why it was characterized as money (Hiç, 1971: p.9; cited in Doğan, 2018: p.230).  In the Ottoman Empire, the first paper money was printed in 1840 under the name “Kaime”, although it had a different structure from today’s understanding of money (Canbaz and Berkun, 2021: p.101).

When those who deal with the science of economics look at the functions of money in terms of economic and sociological structure, they share the consensus that money is a medium of exchange, a store of value and a unit of account. In addition, they also state that money should be generally accepted in the social structure, have a structure based on laws, be suitable for distribution, preserve the value attributed to it, have the opportunity to be easily transportable, be suitable for borrowing, and have sufficient amount of demand (Doorman, 2015: p.15-20; cited in Şahin-Bulut, 2020: p.486). In addition to all these, the classical economic doctrines have constantly expressed the feature of money as an instrument used in economic policies and its feature of being a means of forecasting in planning for the future (Alkış, 2018: p.74).

Money, which has been constantly changing and shaped according to the requirements of its age since it was first used, has found a response in all societies where it has been found in terms of the equivalent of goods or labor in terms of its conceptual structure, the indicator of valid prices in contracts, and the performance of debt. In addition, it has also performed the function of exchange as a means of investment and wealth accumulation and with the quality of being equivalent to the value of goods (Kahveci-Bilginer, 2021: pp.261). In addition to its feature of facilitating exchange and determining the exchange value in the periods when it was first used, money started to gain the feature of being a means of accumulating economic value and determining monetary policy depending on savings over time. With the transition from coin (gold-silver) coins to the paper money system, the documents presented by the sarrafs, who played the role of custodians of precious metals such as gold and silver, in return for the custody of their customers’ precious metals, started to be printed without any equivalent in time (Korkut, 2020: p.4-5). The infrastructure of the printing of coins that were put into circulation without any equivalent, from the coins printed as the equivalent of the gold that existed in central banks in economic systems until recently, also goes back to these points.

III. What is Cryptocurrency?

Teknolojik While the virtual life created in the internet world due to the speed of technological development affects the whole world with everything, the financial system could not be expected to be isolated from this, of course. Depending on the digitalization in the banking sector, new financial concepts and auxiliary tools have emerged for transfers carried out through intermediary institutions. Although definitions such as electronic-digital money and virtual money, which exist in the new conceptual financial system due to technological developments, seem similar, they are different from crypto money, which is the subject of our study. Cryptocurrency is a system that has emerged completely independent of state authorities, depending on encrypted software with the help of public and secret keys called cryptography and an end-to-end interconnected network, and enables trading and transfer (Kutval & Gençer, 2015: 680-681).

“b money” and “bit gold” created by Wei Dai and Nick Szabo, which were first seen in the financial structure in 1998, became decentralized digital currencies (Şahin & Bulut, 2020: p.496). However, Bitcoin (Btc), which was created in 2008 by a person or community known by the pseudonym Satoshi Nakamoto (Samsung, Toshiba, Nakamichi, Motorola), whose real identity is unknown, dominated the market as the first cryptocurrency with the highest recognition (Canbaz and Berkun, 2021: p.102). All cryptocurrencies other than Btc (Ethereum, Ripple, Litecoin, Monero, etc.) are characterized as altcoins in the market (Şak, 2021: 151).

All cryptocurrencies that work on the same basis as Bitcoin are products of a system with cryptographic codes, called nodes, created through peer-to-peer transactions. The encrypted chain network, defined as blockchain, which is also described as the global transaction ledger of cryptocurrency, produces cryptocurrency by recording it in the digital recording system (Alkış, 2018: p.76). In this emerging system, there is a structure consisting of a group of communities/networks that make transactions and everyone has an interconnected record of every transaction made. Each transaction is accompanied by its own encryption code, which is then confirmed. Once approved by those in the network, the transaction code is transferred to blocks of blocks, and each block created by the system is added to a blockchain to complete the transaction. However, the most important point of this system is that “approval” is the basis of the system, and this feature of cryptocurrency transactions is unidirectional, and the transaction without approval is excluded by the system (Fatarib and Meirison, 2020: p.241). The cryptographically encrypted network, which is expressed by the definition of the blockchain, is a structure that cannot be faked and does not allow the encrypted system to be corrupted.

In case of fraudulent routing on any code within the interconnected network, there will be a differentiation in the block summaries and the chain that is understood by the system to be different in the comparisons to be made will be thrown out of the system (Candan & Yaşlak, 2020: p.269). Thanks to the system created as a data storage chain connected one after another thanks to the software integrated with open source code, these financial assets can be stored with materials such as mobile phones, tablet computers or temporary storage devices, and these devices can be defined as wallets in the system (Onur, 2019: p.333).

Cryptocurrency differs from paper money or coins in that it is not offered to the market by the central bank of any country, but is directed to the financial world by identifiable or unknown parties. Such money is not subject to international laws and regulations. For this reason, many smugglers use this system and it is in demand because they can conduct transactions outside the banking structure and are difficult to trace. The value of this currency is volatile, and it is possible to experience a large depreciation or appreciation in a short period of time. The products of this structure are highly influenced by the market and zigzag in economic value. In essence, this system is just computer software, and as money it is transformed into an object of value, which is computer software. However, the value of paper money as a financial instrument is much more stable than cryptocurrency as it is affected by the economic power of a country (Fatarib and Meirison, 2020: p.242).

Bitcoin, the first example of cryptocurrency, gives us clues to see how the system works. The Bitcoin system is controlled by miner computers called “nodes” on which the root software is installed in an international peripheral plane. The system is based on a node to be created every 10 minutes, and thanks to the incentive mechanism, block chains are created by miners by uploading the requirements for the creation of blocks to the system. By 2140, 21,000,000 Btc will be created and the system will complete itself with this number (Selçuk and Kaya, 2020:p.142). Digital signatures are created through public and secret keys within the system, and it is considered impossible to access the cryptographic keys encoded in sequential or dispersed sequences by any other method from outside, and to collapse the system with cyber attacks (Candan and Yaşlak, 2020: p.264-265). What increases the validity and value of cryptocurrencies is that they are scarce as they cannot exceed a certain number and cannot be counterfeited with security measures. The fact that these currencies created with encrypted coding allow inter-account transfers at low costs makes them a financial instrument whose prevalence is increasing exponentially day by day due to the solution of settlement transactions and offsetting problems (Kahveci and Bilginer, 2021: p.266).

With the increasing place of the internet in our lives due to the changing technological order and the digitalization of the shopping culture, two main factors are believed to have increased the awareness of cryptocurrencies and the first one, BTC. The first of these is the increasing passion for technology and the fact that it is seen as the most profitable harbor for those who do not trust the global financial system (Yermack, 2015; cited in Özdemir, Orhan, & Burgazoğlu, 2020: p.309). However, the most attractive aspect of the demand for cryptocurrencies by international financial investors is that international transactions are made without intermediaries and without paying any commission. Another reason for this high demand is the ease in enabling transactions of unknown origin or transactions that are not considered legal. Although this situation is met with concern due to the creation of an authority vacuum, it does not change the need to adapt to the pace of technological development in conventional banking and finance and to integrate this innovation into the economic structure as soon as possible (Şahin & Bulut, 2020: p.499).

IV. The Structure of Interest as an Informal System: Cryptocurrencies

Depending on technological developments, all sociological, commercial, financial and economic knowledge is changing, and the speed of what is being done cannot be kept up due to the borders that have been removed with globalization. Cryptocurrencies, whose interaction as a monetary system is rapidly increasing, are being followed and the number of users is rapidly increasing in Turkey as in the whole world. As mentioned in the conceptual definition of the cryptocurrency system, which has a wide range of dimensions, there are problems even in accepting it as money, and there is no consensus on what its structure is in terms of its nature. There is also no theoretical and administrative consensus on whether cryptocurrencies, which have become an important tool in the financial system, can be taxed, and if there is a gain, the type of gain and how the tax will be calculated.

In Turkey, the Capital Markets Board (CMB) and the Banking Regulation and Supervision Agency (BRSA) examine the financial structure and functions of cryptocurrencies and do not define cryptocurrencies as electronic money, while the Central Bank of the Republic of Turkey examines cryptocurrencies with the idea that they may contribute to financial stability in the economy (Şahin-Bulut, 2020: 501). On April 16, 2021, the “Regulation on the Non-Use of Crypto Assets in Payments” published by the Central Bank of the Republic of Turkey used the definition of crypto assets for the first time in a legal text. According to this legal regulation, crypto assets are defined as “intangible assets that are created virtually with distributed ledger technology or a similar technology and distributed over digital networks, but are not characterized as fiat money, dematerialized money, electronic money, payment instruments, securities or other capital market instruments” (Yüce, 2021).

Due to the rapid expansion of the use of cryptocurrencies, the traditional methods used to date are inadequate in terms of taxation as in the entire financial system, and many problems arise regarding the taxation of this structure, which is defined as a supra-state order in the case of cryptocurrency ownership. Most of the countries are working to make legal definitions and regulations in this context, and most of the studies have not yet reached a clear conclusion. However, it is known that how cryptocurrencies are defined for taxation is the most important issue. Some countries want to ban the system altogether, while some countries make legal regulations on cryptocurrencies and characterize them in different ways such as commodities, money or securities (Çember, 2021).

While the importance of what cryptocurrencies are in terms of tax definition is obvious, there is no consensus among countries as to whether cryptocurrencies are commodities, money or securities. In terms of asset philosophy, if cryptocurrencies are included in an asset group, they should be subject to the necessary regulation and supervision under the control of a state intervention as a sovereign power. This idea is opposed to the idea of free monetary resource transfers without dependency, which led to the emergence of cryptocurrencies. However, cryptocurrencies, which do not fulfill the functions of money in terms of its traditional definition, have become an investment instrument in many countries, even though they are not based on any real asset. This situation reveals fraud cases such as Thodex, Bitrota, Vebitcoin, Sistemcoin, Hecoin in Turkey (Canbaz and Berkun, 2021: p.103).

In terms of taxation, the importance of what cryptocurrencies are considered to be is important in terms of seeing which type of income is the basis for taxation. Is cryptocurrency an economic asset (commodity) or should it be considered as a currency (electronic document)? While cryptocurrencies are defined as “intangible assets” in countries such as Australia, France, Spain, Sweden, Switzerland and the UK, cryptocurrencies are recognized as “financial assets” in countries such as Japan, Brazil and Denmark. China, Austria, Indonesia, Indonesia and Canada consider cryptocurrencies as commodities. In countries such as Belgium, Italy, El Salvador and Poland, cryptocurrencies are exceptionally accepted as “money” (Circle, 2021).  According to these classifications, cryptocurrencies are considered within the scope of Capital Gains Tax in the US, Australia, Germany, Finland, the UK, Spain, Italy, Israel, India and Japan. In addition, in the OECD report, it is reported that the introduction of small tax exemptions for small investors who want to evaluate their cash assets in the cryptocurrency market will be an arrangement that will facilitate tax compliance of individuals and that it would be appropriate to exclude the increases in economic values as a result of these transactions (Yüce, 2021).

If we need to go through a few international examples, we can give the following examples regarding the practices:

– Contrary to the perspectives of other states, the US tax authority, the IRS, considers Bitcoin as a commodity, not a cash asset, and has decided to tax tax taxpayers at a flat rate of 15%. However, the US Treasury Department’s new Greenbook, published in May 2021, contains stricter requirements for the taxation of cryptocurrencies (Cacioppoli, 2021).

– In Germany, earnings from cryptocurrencies are taxed within the scope of 25% capital gains tax, cryptocurrencies held for more than one year are exempt from tax, and the 600 Euro gain obtained in disposals in less than one year is exempt from tax (Cebecioğlu, 2017).

– The Australian government also classifies Bitcoin and other cryptocurrencies as assets, not as money or foreign currency, and states that 50% less tax will be paid on cryptocurrency gains if held for 1 year before disposal (Australia Crypto Tax, 2021).

– Finland also considers gains on cryptocurrencies as capital income, and it is reported that a tax of 30% or 34% will be calculated according to the annual income over banking transactions depending on the gain (Janita, 2018).

– The United Kingdom has chosen to integrate crypto assets into its existing tax system rather than subjecting them to a separate taxation system. If a crypto asset transaction is subject to capital gains tax, taxpayers are subject to a rate ranging from 10% to 20% depending on the size of the capital gain, and if a crypto asset transaction is subject to income tax, this rate varies between 0% and 45% (Doğanay and Odabaş, 2022:123).

Income derived from cryptocurrency is considered outside the scope of taxation in Malta, Hong Kong, Singapore and Portugal, while in most countries it is treated as “intangible assets” for the purposes of capital gains tax. Capital gains tax is a type of tax imposed on income derived from capital or profits from the sale of assets owned by an individual. In order for the tax to apply, the asset must become a cash asset, i.e. it is not possible to impose tax on the asset held by the investor. When cryptocurrency is disposed of, that is, any of the transactions that mean selling, gifting, exchanging, converting, or using crypto to buy something must be done (Gago and Ağaç, 2021).

In Turkey, in the 2021-2023 Medium Term Development Program published in the Official Gazette in September 2020, it is seen that a course of action on the taxation of cryptocurrencies will be determined in the near future by stating that “Efforts will be continued to tax transactions made using virtual assets that can be sold and transferred digitally and represent a digital value, and a monitoring mechanism will be established to prevent the use of these assets in the financing of crime”. Due to the extraordinary events in the world and the country’s agenda, although a date was set to establish legal regulations until 31.12.2021, it was expected that there would be no enactment as the election period was entered.

V. Cryptocurrency in terms of Financial Security

Money can be defined as a financial instrument that attracts the most attention as a means of exchange in economic and commercial relations and that embodies common values. Considering the borderless dimensions of global life, the idea that money should be created by the state, which is the dominant power for the general acceptance of money, has started to collapse. Technological development has completely changed the theoretical understandings in financial life. Cryptocurrencies were created in a decentralized structure with the article written in 2008 by the person or group known as “Satoshi Nakamoto”, whose identity is not really known. Now, thanks to the digital signature and the chains created by the parties to the system on their own networks, it has become possible to exchange money value between the parties without the need for any financial institution.

Despite the high risk element, interest in cryptocurrencies, which have experienced faster volume growth after 2018, is increasing day by day. Cryptocurrencies, which have completely changed the values and structure of the monetary economy, which is the authoritative power over the world economy, threaten financial security. However, although it is a supra-state structure, individuals living in their own societies must comply with the legal norms of the states in which they live and participate in public expenditures. In terms of the taxes they have to pay as citizens, decisions on whether cryptocurrencies should be considered assets or money, and whether transactions are legal or illegal transactions have not yet been settled.

In addition, it is predicted that the prevalence of cryptocurrencies will increase even more than paper money, as digital-scale structuring will increase even more in the coming time period. Although the decentralized structure is the most prominent feature of cryptocurrencies, the idea of creating cryptocurrencies by governments has started to come to the fore. Along with Dubai, which issued the first cryptocurrency under the name “emCash”, countries such as Venezuela, Estonia, the UK, Russia, Israel, Switzerland, South Korea and New Zealand are countries that aim to create their own cryptocurrencies and partially succeeded (Yılmazer, 2021: p.38). The number of transactions made with Bitcoin is quite high in countries such as the USA, Germany, France and Canada, which are leading the world economy. In Japan and Ireland, there are even ATMs that make Bitcoin transactions (Kahveci-Bilginer, 2021: p.268). The central banks of countries that do not want to lose their seigniorage revenues and governments that do not want to lose their financial efficiency will spread the idea of creating their own country cryptocurrencies, and it is unthinkable for Turkey to be separated from this idea.

The basic monetary theory of “bad money drives good money out of the market” is the theory that silver money eliminates gold money in the market and silver gains more use as a medium of exchange. Cryptocurrency technology, which includes private money and a free banking system, has a number of shortcomings. At the same time, as a structure that includes important security problems, it has the potential to reach levels that can affect the currencies of countries within the monetary and financial system. In this sense, cryptocurrencies can become a priority in the monetary systems of countries by manifesting themselves within the structure of classical monetary theory. The Central American country of El Salvador became the first country in the world to officially accept digital money after the cryptocurrency Bitcoin was legalized in parliament on June 6, 2020. Bitcoin has been used for more than two years for shopping in businesses on the El Zonte beach in the Chiltuipan town of Chiltuipan in El Salvador’s La Libertad region (Alex Pena/AA; cited in Yüce, 2021).

However, when we evaluate the cryptocurrency system within itself, since many altcoins enter the market and exist, altcoins should not cause a problem of trust in the market in terms of their market activity. Thus, for cryptocurrencies, whose acceptability is increasing, this situation means that the classical monetary theory evolves into the opposite process. According to Eğilmez (2017), the value of cryptocurrencies is determined by the conditions of supply and demand in the market, not because of their coinage or reputable state authority, but because they are accepted by their users as a means of exchange or traded according to a commodity acceptance (Şahin-Bulut, 2020: p.497). In the cryptocurrencies created through blockchains in accordance with the free banking system, the better ones will increase their effectiveness in the market, and over time, the cryptocurrency that cannot maintain its value will be deleted from the market. In this case, the strong cryptocurrency will remain in the system, while the cryptocurrencies that are considered weak and become worthless will start to disappear from the market. This will lead to the acceptance of the validity of the new theory expressed as “good money drives bad money out of the market”, which is defined as Thiers’ law, from the theoretical situation of “bad money drives good money out of the market” expressed in Gresham’s law (Aktan, 2019:10-25; cited in Şahin-Bulut, 2020: 488).

While many economists only discuss the value of the currency, they establish the valuable currency as a legal basis and accept that transactions should be allowed with currencies that already have these value criteria. Cryptocurrencies should also be created by the state and transactions should be supervised by the state with a guaranteed value standard. It is recognized that cryptocurrencies are an unknown and unsecured financial instrument that is vulnerable to various forms of crime, such as fraud and smuggling through Ponzi schemes, money laundering through illegal transactions (drugs, etc.) and others.

VI. Conclusion

With more than 1 million investors, Turkey ranks fourth in the world and first in Europe with 16 percent in the ranking of the country with the highest cryptocurrency usage in proportion to its population (Kızılkaya and Bakiler, 2021). Cryptocurrencies may be attracting a lot of attention due to the fact that they have a high return on earnings and do not involve the obligation of taxation, despite the high risk. However, what should be done should not be to act only with the idea of taxation and realize only the idea of taxed earnings. Legal procedures should be established with a cautious, rule-based and broad perspective that will ensure that the country’s investors remain within the system in a way that their constitutional rights are not harmed, rather than being caught up in the thoughts of escaping out of the system within the framework of tax avoidance by escaping to foreign intermediaries. Since the state of secrecy is the prominent structural situation in the cryptocurrency system, international cooperation is also needed to remove the obstacles to its being seen as the financing of crime, which is also mentioned in OECD reports (Gago and Ağaç, 2021).

In Turkey, within the scope of the “Regulation on the Non-Use of Crypto Assets in Payments” published by the Central Bank of the Republic of Turkey, the use of cryptocurrencies is prohibited until certain legal studies are carried out due to the possible risks they may pose in payment transactions. Cryptocurrencies, which are seen as suspicious in terms of Islamic law and characterized as risky in terms of their financial structure, should be included in the scope of taxable earnings in Turkey, where the number of transactions continues to be very high. As legal regulations begin to be made at the international level in accordance with the presumption of legality, the risks of the cryptocurrency system, which is rapidly increasing worldwide, will be eliminated, and changes may occur in the opinions of those who express the opinion that it should not be used.

In terms of the principles of taxation of cryptocurrencies, it would be appropriate to consider cryptocurrencies as securities assets in Turkey, as it has started to be applied in many countries. Since cryptocurrencies are mostly seen as a medium and long-term investment instrument, they should be considered as a financial asset defined as a valuable document that constitutes a right of receivable. The increase in value between the period in which the money is acquired and the period in which it is disposed of should be taxed in terms of value increase gain within the scope of income tax. As it is applied in OECD countries, it will be subject to income tax for individuals and corporate tax for legal entities. It will be taxed within the scope of commercial earnings depending on the commission income obtained for the institutions performing the brokerage activity. In order to encourage tax compliance for small investors who want to invest their money in the cryptocurrency market, it is necessary to define small tax exemptions in terms of taxation of income in order to be an acceptable regulation.

There are no guarantees as the actual source of the cryptocurrency is unknown. It is considered inappropriate to trade in this currency because it harbors fraudulent transactions, causes improper transfer of resources, is seen as a means of exploiting wealth, and mediates international crimes such as human trafficking. The main problem in the field of financial security, which is driven by states, is that cryptocurrencies, due to their lack of provenance, can be a breeding ground for political or structural formations with anarchy or illegitimate content. Thus, it is positioned on highly political and economic unsolvable problems related to negative relations in the economic structure of the market. The following definition of financial security should be essential: The fundamental issue is stability in the circulation of goods, money, services and people at the global level. Financial stability can be interpreted as the socially accepted or calculated risks of economic ventures, where changes occur only within known limits (Mesjasz, 2008:136).

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