Taxation in cryptocurrency markets: Tax policies for new digital assets

The role of money in commercial life is constantly changing with the impact of technology. With the emergence of the internet, the development of e-commerce has led to the emergence of alternative payment methods. Therefore, the use of digital and virtual currencies is rapidly increasing. Cryptocurrencies enable individuals to transfer money between each other without being dependent on central authorities, thanks to the evolving technology. Cryptocurrencies are secured through various cryptographic systems. Cryptocurrencies, which were founded in 2008, were seen as an alternative to existing currencies. However, the regulation of cryptocurrencies, which were found to create some gaps in the financial sector, has started to be discussed in Turkey and worldwide. Among these regulations, the taxation of cryptocurrencies is one of the leading issues. Different countries adopt different taxation approaches and develop new approaches in terms of taxation. Cryptocurrencies are a rapidly popular digital asset type in recent years. Emerging as an alternative to traditional currencies, cryptocurrencies have a decentralized structure empowered by blockchain technology. Thus, the use and transfer of cryptocurrencies are faster and more secure. There is no clear legislation in Turkey yet regarding cryptocurrencies. Therefore, it is not possible to classify cryptocurrencies exactly as commodities, securities, or money. However, buying, selling, using, or mining cryptocurrencies is not prohibited. In this study, we will examine the historical evolution of the concept of money and explain the definition and functioning of cryptocurrencies in detail. We will also provide information about blockchain technology and analyze its effects on cryptocurrencies. The issue of the taxation of cryptocurrencies is also of great importance. Therefore, we will meticulously examine the cryptocurrency taxation methods of some countries worldwide and the current approaches in Turkey. The main purpose of this study is to increase the level of knowledge on the nature, operation, and taxation of cryptocurrencies for readers by presenting the subject matter in an official language.