A leading industry organization in Russia has decided to establish an arbitration body to look into disputes within the digital economy, including matters related to cryptocurrency transactions, as well as rights and responsibilities in token sales and the implementation of smart contracts.
Industry Organization Appoints Arbitration Board
The absence of comprehensive regulations for Russia’s fintech sector has been a source of continued legal uncertainty. In recent years, courts have been challenged to consider a growing number of so-called “digital cases,” many of which have been filed as a result of business disputes in the nascent cryptocurrency industry.
Experts from relevant fields have been invited to join the new arbitration body, which will be formed by the Russian Union of Industrialists and Entrepreneurs (RSPP). The influential organization recently criticized new draft legislation designed to regulate the crypto space, after lawmakers proposed a number of complicated rules and removed key terms such as “cryptocurrency” and “smart contracts” from the bill. The Russian business community has responded by promoting an alternative draft that would grant cryptocurrencies “special status.”
The arbitration body will review disputes between parties to smart contracts that have been recorded in distributed ledgers, as well as disagreements between participants in cryptocurrency transactions and initial coin offerings (ICOs). Elina Sidorenko, the head of a parliamentary group assessing the risks associated with cryptocurrencies, is the leading candidate to chair the new arbitration board, according to the Kommersant newspaper. She told the business daily that its members have already been selected.
Sidorenko also noted that the Russian judicial system faces a number of challenges in resolving cryptocurrency-related disputes, as there are currently no legal mechanisms in place to protect the rights of investors in the digital economy. The number of competent legal experts who understand the specifics of the largely unregulated sector is also still insufficient.
Courts Struggle With Cryptocurrency-Related Cases
The number of civil disputes related to the use of digital technologies continues to grow. Russian courts reviewed 148 such cases between 2014 and 2018, 45 percent of which were related to the fulfillment of obligations under smart contracts and the use of cryptocurrencies and tokens. The ICO boom that started last year is likely to lead to even more disputes in the next few years. Russian courts are expected to deal with up to 4,000 cases per year by 2025.
Sidorenko said the new arbitration board will convene in the early weeks of 2019. In addition to cryptocurrency-related cases, the panel will look at disputes over digital services, as well as issues related to the implementation of artificial intelligence, robotics and other advanced technologies in different sectors of the economy.
For the time being, the legal status of cryptocurrencies in Russia remains undetermined. In a ruling on a bankruptcy case in May, a Russian arbitration court of appeals recognized cryptocurrencies as property with value. Public discussions are now underway on the latest version of the legislation, which was adopted on first reading by the lower house of Russia’s parliament earlier this year. The Federal Financial Monitoring Service will oversee the cryptocurrency industry once the regulatory framework has been approved.
Do you think arbitration is a good approach to resolving disputes in the cryptocurrency industry? Share your thoughts in the comments section.