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NFTs used for in-game purchases under Turkish Law


Introduction

Although there is no clear definition of the term non-fungible tokens (NFT) in Turkish law, NFTs are considered non-fungible data units in the blockchain system. Some examples are:

  • collectibles;

  • in-game items;

  • digital art;

  • event tickets;

  • domain names; and

  • ownership records for physical assets.

The use of NFTs in games is a topic that has been discussed under different angles, especially with the storm that NFTs have created recently. Some of these games allow in-game purchases, and players may pay for their in-game items with NFTs. Due to lack of regulation and a clear definition, the question is whether these purchases are valid under Turkish law.


Legislation on payments

The Regulation on Non-Use of Crypto Assets in Payments (the regulation), published in the Official Gazette No. 31456 on 16 April 2021, regulates that crypto assets cannot be directly or indirectly used for payments.

The regulation defines crypto assets as:


intangible assets that are created virtually and distributed over digital networks using distributed ledger technology or similar technology, which do not qualify as fiat money, bank money, electronic money, payment instruments, securities, or other capital market instruments.


NFTs may fall under this definition. If so, it can be deduced that NFTs cannot be used for payments in Turkey, and payment is not valid according to Turkish law if a sales agreement including in-game purchases are paid for by NFTs. That said, only paying through NFTs should not invalidate the agreement between the player and publisher.


According to the Turkish Code of Obligations (TCO), which regulates main debt relations under Turkish law, parties have a "freedom of contract", meaning parties are free to choose the contracting party and determine the subjects of the contract in signing a contract. The limits of this freedom are mandatory provisions of the law, morality, public order, personal rights or impossibility.


Although receiving payments where NFTs are used as the payment method is prohibited according to the regulation, this prohibition should only apply to the vendor's or payment provider's detriment and cannot be to the detriment of the consumer who purchased an in-game item by using NFTs.


Agreements and exceptions

Another aspect to consider is the type of agreement that the sale entails, which may circumvent the payment issue above, rendering NFT payments invalid.


Due to the freedom of contract principle in the TCO, it is possible for the parties to form an agreement that is not clearly defined in the TCO. It is also possible to interpret an agreement defined in the TCO by analogy. Under the TCO, an agreement may be used in goods exchange contracts whereby one party undertakes to transfer the possession and ownership of one or more items to the other party, and the other party undertakes to transfer the possession and ownership of another or more items in return. In this sense, since NFTs are considered assets, in-game purchases with NFTs can be considered as a goods exchange contract and would be valid under Turkish Law.


Authors: Burak Özdağıstanli, Ebru Gümüş

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