“DIGITAL ASSETS AND ARBITRATION IN INSOLVENCY PROCEEDINGS: CHALLENGES IN A BORDERLESS BLOCKCHAIN ERA”
AUTHORS – SAGAR DUTTA & HARSHITA DUBEY, STUDENTS OF ST. XAVIER’S UNIVERSITY, KOLKATA
BEST CITATION – SAGAR DUTTA & HARSHITA DUBEY, “DIGITAL ASSETS AND ARBITRATION IN INSOLVENCY PROCEEDINGS: CHALLENGES IN A BORDERLESS BLOCKCHAIN ERA”, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (1) OF 2025, PG. 38-45, APIS – 3920 – 0001 & ISSN – 2583-2344.
Introduction
Digital assets, which include cryptocurrencies, tokens, non-fungible tokens (NFTs), and other blockchain-based assets, pose unique challenges under insolvency laws. Unlike traditional assets, digital assets often exist on decentralized platforms, making them intangible and difficult to categorize within existing legal frameworks.[1] Insolvency laws across jurisdictions have struggled to define these assets uniformly, leading to fragmented approaches. For example, some jurisdictions classify cryptocurrencies as property, while others view them as commodities or even securities. This lack of harmonization complicates the resolution of insolvency cases where digital assets form a significant part of the debtor’s estate. At the national level, countries like the United States have begun to integrate digital assets into their legal systems, categorizing them under property law for insolvency purposes. In contrast, the European Union has adopted the Markets in Crypto-Assets Regulation (MiCA) to provide a more cohesive regulatory approach. However, the international landscape remains inconsistent. The United Nations Commission on International Trade Law (UNCITRAL) has not yet provided clear guidelines for digital asset classification in insolvency cases, leaving practitioners to rely on bilateral or regional frameworks. This divergence complicates cross-border insolvencies, as courts may struggle to determine the legal status of digital assets held across jurisdictions.[2]
[1] Sharma R. Non-Fungible Token (NFT): What it means and how it works. Investopedia. https://www.investopedia.com/non-fungible-tokens-nft-5115211. Published June 12, 2024.
[2] Insolvency | United Nations Commission on International Trade Law. https://uncitral.un.org/en/texts/insolvency.