19

Blockchain and Cryptocurrency

people from investing. In an immature market, volatility is expected to decrease as

the transaction volume increases over time. Another issue related to the volume of

cryptocurrency is supply. As stated before, the value of cryptocurrency is related to

the balance of supply and demand like a normal good. The supply of cryptocurren­

cies is usually determined from the beginning. This situation limits supply-related

price movements. Since crypto markets are not yet fully known and have not reached

large volumes, and the system has not been determined, their values are rapidly and

greatly affected by news, perception operations, and speculative and manipulative

initiatives.

2.6  LEGAL STATUS OF CRYPTOCURRENCIES

Official authorities are cautious about cryptocurrencies, which are met with great

interest and considered relevant by innovative circles. The facts that cryptocurren­

cies are not dependent on any central authority, they can be easily used in inter­

national transfers, and price fluctuations are high make the authorities nervous.

Especially in the first years, countries and organizations that have a say in the world

economy have preferred to adopt tough attitudes. However, it can be said that these

countries have loosened their approach over time, observing the increased interest

and returns along with the risks. In general, it is said that developed countries are

relatively more cautious and restrictive, and developing countries are more moder­

ate with their efforts to turn the situation into an opportunity, but it is not possible

to talk about a well-established and widely accepted approach to cryptocurrencies.

Over time, three different approaches to cryptocurrencies have developed around the

world: Banning them completely, allowing controlled development through auditing

by giving restricted permissions, and staying neutral by not introducing any regula­

tion or prohibition (Jackson, 2018; Lerer, 2019).

The United States is one of the countries whose steps at this point are being care­

fully followed due to their economic size and leadership in the volume of cryptocur­

rencies. Although cryptocurrencies are not recognized as legal in the United States,

they have been removed from being perceived as a significant threat. Cryptocurrency

exchanges are considered legal. Although cryptocurrencies are not legally accepted

in Canada, cryptocurrency exchanges are legally evaluated with the registration

requirement to the Financial Transactions and Reports Analysis Center of Canada.

In China, cryptocurrencies are not accepted as legal payment instruments, and cryp­

tocurrency exchanges are considered illegal. Cryptocurrencies are not accepted

as a legal financial instrument in Russia. Although cryptocurrencies are not seen

as a legal payment instrument in the United Kingdom, cryptocurrency exchanges

are legal on condition of registration with the Financial Conduct Authority. The

European Union recognizes cryptocurrencies legally, and regulations regarding

cryptocurrency exchanges differ between member countries. In India, cryptocurren­

cies are not accepted as a legal payment instrument, but cryptocurrency exchanges

are considered legal. South Korea is one of the countries that are brave about cryp­

tocurrencies. The South Korean government supports the trading of cryptocurren­

cies and in 2018 passed a law allowing transactions with cryptocurrencies from real