Originally from World Arbitration and Mediation Review (WAMR)

PREVIEW

ABSTRACT

Cryptocurrency is a term that has been in vogue recently. The interest in cryptocurrency has created new avenues and has also raised legal and regulatory questions on how disputes relating to cryptocurrency must be solved. Given the unregulated and transnational nature of cryptocurrency disputes, this article aims to answer whether such disputes can be decided by arbitration. The Supreme Court has actively prescribed tests on arbitrability, and it is this article’s argument that most cryptocurrency disputes pass those tests and hence can be subjected to arbitration, except for cryptocurrency disputes that may have implications in the public domain.  This article further submits that the concepts of party autonomy, confidentiality, global enforceability of awards and procedural flexibility, are other reasons to favor the arbitrability of cryptocurrency disputes.  This article concludes with the hope that disputes arising out of cryptocurrencies will be arbitrable, and the arbitral awards in such disputes will be enforceable in India.

I.   INTRODUCTION

Cryptocurrency is a virtual and digital currency, which is monitored by a peer-to-peer network called a Blockchain.  The popularity of cryptocurrency is only increasing, perhaps due to its decentralized nature and procedural ease. However, the advantages of cryptocurrency can also make it dangerous, as it can be misused for illegal activities, such as hacking or money-laundering. Furthermore, cryptocurrency is speculative and volatile in nature and is still not universally accepted as a medium of exchange. It is, perhaps, these concerns that have made it a contentious issue in India.

The Reserve Bank of India (“RBI”) issued several notices iterating its concerns and the risks involved in the use of virtual currencies.  For instance, the RBI issued a circular dated 6 April 2018 (“6 April 2018 Circular”), preventing entities regulated by the RBI from dealing in virtual currencies or providing services for facilitating any person or entity in dealing with or settling virtual currencies.  The Department of Economics of the Ministry of Finance assembled an Inter-Ministerial Committee (“IMC”) to clarify the framework of virtual currencies. The IMC was responsible for providing suggestions regarding cryptocurrency and proposing specific actions to be taken.  The IMC recommended the Crypto Token and Crypto Asset (Banning, Control and Regulation) Bill of 2018 (which was never introduced in the Parliament)  and the Banning of Cryptocurrency and Regulation of Official Digital Currency Bill in February 2019.   However, these bills have not yet materialized into law, and their fate is still unclear.