Abstract

Crypto market makers and decentralised liquidity providers play a central role in maintaining liquidity on the crypto exchanges. Their activities are usually subject to strict regulations by the host state of the exchange. This article examines whether, and under what conditions, crypto market makers and decentralised liquidity providers (DLPs) may avail themselves of protection under investment treaty arbitration. Drawing on the analytical framework of legal and economic materialisation of an investment, the article argues that, subject to the specifics of the domestic property law, the protection may extend to the quoting systems and inventories maintained by crypto market makers and to the crypto assets deposited by the DLPs in the automated market makers. The article further considers the implications of these analyses for market makers and DLPs, state regulators, and investment tribunals, and cautions against an expansive extension of investment treaty protection to investments in decentralised finance without careful, context-specific analysis. 

This paper will be part of the TDM Special Issue on "Cryptocurrencies and Other Digital Assets in Arbitration". More information here www.transnational-dispute-management.com/news.asp?key=2080