Token

Scope

Capital Markets Law No. 6362, through the provision added by Law No. 7518, defines a crypto-asset as an intangible asset that can be created and stored electronically by means of distributed ledger technology or a similar technology, is distributed over digital networks and can represent a value or a right (Art. 3/1-bb). The Law does not use the word “token.” The Communiqué of the Capital Markets Board (Sermaye Piyasası Kurulu) on the Working Procedures and Principles and Capital Adequacy of Crypto Asset Service Providers (III-35/B.2) defines a token as a crypto-asset that does not have a distributed ledger network of its own and is created through smart contracts on an existing infrastructure (Art. 4/1-u). Accordingly, every token is a crypto-asset; crypto-assets operating on their own network do not fall within this definition. The legal nature of a token varies according to the right it represents: for crypto-assets that provide rights specific to capital market instruments, the power to issue regulations, take decisions and impose sanctions belongs to the Capital Markets Board (Law Art. 35/B, paragraph 6).

Practical significance

Before a token is issued or its sale is intermediated, what it represents must be determined: a token that provides rights specific to a capital market instrument, such as a share or debt, may be subject to different rules from a token that merely provides access to a service. Platforms are obliged to check the minimum elements in the smart contract of the crypto-asset whose initial sale or distribution they will intermediate, and, if assets within the regulatory field of other institutions are sold as tokens, to confirm that the requirements of that institution have been met (Communiqué Art. 16/1, 16/4). The Regulation on Not Using Crypto Assets in Payments of the Central Bank of the Republic of Türkiye (Türkiye Cumhuriyet Merkez Bankası), for its part, prohibits the direct or indirect use of crypto-assets in payments (Art. 3).

Commonly confused concepts

A token and a crypto-asset are not the same thing: the crypto-asset is the broader concept, and a token is a type created on top of another network. A token should also not be confused with electronic money regulated by Law No. 6493; the Central Bank’s regulation defines a crypto-asset as an asset that is not regarded as electronic money or a payment instrument. In technical usage, token is also used for a digital representation that replaces card details (tokenization) or for a device that generates one-time passwords; these meanings are independent of the crypto-asset meaning.