Blockchain can’t be separated from crypto in a progressive manner because extracting blockchain from crypto diminishes the former to a glorified database, leaving all the exciting opportunities out, Turkish law expert Elçin Karatay told Cointelegraph.
As a country that saw Bitcoin (BTC) hit an all-time high on a very different date than the rest of the world, Turkey’s efforts on establishing a regulatory framework while the population flocks to cryptocurrencies as a way to hedge against double-digit inflation can help understanding how to manage crypto regulation in unstable economies.
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Following Turkish President Recep Tayyip Erdoğan’s confirmation that a crypto law is in the works, the Turkish Parliament hosted a delegation of local crypto experts in a bid to better understand the expectations of the ecosystem. Cointelegraph reached out to Elçin Karatay, who was among the group, to get a lawyer’s perspective on the meeting held in Ankara. Karatay is a founding member of the Fintech Association Turkey and works as a managing partner at Solak and Partners law firm.
Defying the popular ”blockchain-is-good-crypto-is-bad” narrative, she argued that blockchain by itself does not require a comprehensive legal assessment as it would be diminished to an essential database technology if crypto is removed from it:
“All the opportunities created by this industry, just like all the risks, manifest themselves in the fields where crypto and blockchain go hand in hand.”
When the governments don this narrative, it results in either total crypto bans or a legalized, “lite” version of crypto that doesn’t have any of the soul of decentralization left in it, she added. Balance is of utmost importance when it comes to establishing a regulatory framework around crypto, Karatay said:
“If you only focus on eliminating risks associated with a specific industry in regulatory efforts, you would also eliminate any potential benefits and opportunities that would otherwise be offered by the same industry.”
The Turkish blockchain ecosystem, as with any other international business hubs, needs regulation that encourages innovation while protecting individuals’ rights, Karatay said. During the meeting, each participant shared the necessary steps from their own perspective. Lawmakers avoided sharing any commentary as the aim of the session was to hear the opinion of the crypto ecosystem.
Related: Crypto and NFTs meet regulation as Turkey takes on the digital future
Karatay presented real examples of establishing balanced regulation for cryptocurrencies during the meeting. She explained to lawmakers how the European Union’s draft legislation handles crypto-related funds and how to distinguish between security-, utility- and asset-based tokens.
She also used this opportunity to explain why limiting and “extreme” regulation would not be efficient. Seeing the lawmakers’ invitation to crypto experts as a positive step toward a balanced regulatory approach, Karatay stressed that the overall atmosphere of the meeting, which might be the first of a series, was optimistic.
For a quick recap, there’s no official regulatory framework in Turkey despite President Recep Tayyip Erdoğan’s harsh criticism of crypto. Since they are treated as assets and not monetary instruments, cryptocurrencies have been banned as a payment method since April 2021.