Abstract

Arbitrating disputes involving crypto assets demands new approaches to valuation and damages. While liquid cryptocurrencies have market quotes, many tokens trade thinly, giving wide bid-ask spreads and opaque pricing.  Valuing crypto businesses is similarly difficult: few public comparables exist, and volatility can make future cash flows unpredictable. As one analyst notes, “the choice of valuation date can significantly impact” damages in the crypto winter.  Furthermore, attributing losses to a breach must control for wild market swings: isolating a state or counterparty action from global speculation is “extremely complicated”. This paper will review valuation methods (market, income, cost and crypto-specific metrics) and assess their applicability. Using comparative and hypothetical analyses, this study will illustrate how tribunals might set valuation dates, choose reference prices, and adapt traditional damage measures (e.g., expectation loss vs. fair market value) to ensure fairness in volatile digital asset cases.

This paper draws its findings from a comparative analysis of the United States, the United Kingdom, Singapore, Germany and Hong Kong, to demonstrate how different regulatory methods coexist alongside the requirement for unified reform structures. The research demonstrates that technological and normative progress in arbitration systems creates the best possible system to protect fairness and enforceability in the crypto-economy.

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