Protecting Digital Assets under International Investment Law

Abstract

This chapter examines the applicability of international investment law to emerging digital asset classes such as data packages, cryptocurrencies, and non-fungible tokens (NFTs). These assets, now mainstream investments, raise unique issues in terms of their protection under investment treaties. The chapter explores whether digital assets qualify as ’investments’ under traditional treaty definitions, and the application of the common protections offered under investment treaties to such assets. It assesses digital assets against criteria often applied by investment treaty tribunals to argue that digital assets can broadly be classified as investments. The chapter also analyses the key questions arising from the application of the fair and equitable treatment (FET) standard and protection against expropriation to digital assets, especially given the current relative lack of regulation in this area. Valuation complexities, including market volatility and the absence of benchmarks, are addressed, emphasising the need for close consideration of these issues in the context of investment treaty claims. Lastly, the chapter addresses structuring investments via corporate vehicles to enhance treaty protections and mitigate risks. It concludes that, while investment law can accommodate digital assets, careful structuring and awareness of treaty terms are vital for investor protection within an uncertain and ever-evolving regulatory environment.