Are Cryptocurrency Assets a Protected Investment Under Investment Treaties?

This article considers the jurisdictional aspects of protection of cryptocurrencies under investment treaties, namely: (1) whether or not cryptocurrencies constitute an asset capable of protection under investment treaties and, in particular, the relevance of recognition of title to cryptocurrency under the applicable law, as well as whether such assets qualify for protection under the Salini test; (2) how the territorial link to the host state can be established, given the delocalized nature of cryptocurrencies and blockchain. A parallel is drawn to the line of jurisprudence on whether or not delocalized financial instruments such as bonds can constitute protected investments under Bilateral Investment Treaties (BITs). It is concluded that whether or not cryptocurrencies can qualify as protected investments will inevitably depend on the specific circumstances of each case. There is no reason why cryptocurrency assets cannot, in principle, be a protected investment under investment treaties; however, at least for self-standing investments consisting of cryptocurrency only, it may be challenging to meet the requirement of proving contribution to the development of the host state.