Regulatory policy

Bitcoin and public policy in the application of international arbitration

Bitcoin and Public policy in the application of international arbitration

Cryptocurrencies are a fast-spreading form of transaction in the global financial system and regulators have recognized that crypto-assets are here to stay; they can support financial inclusion, provide secure payments and improve controls. However, cryptocurrency technology, with its innovative features such as decentralized nature, lack of central authority, and inherent anonymity of users, creates significant concerns in terms of tax evasion, money laundering and terrorist financing.

Greeceamong other countries, has not adopted an appropriate and specific regulatory framework to regulate all matters arising from the operation of cryptocurrencies within Greeceand Greek jurisprudence seems hesitant to recognize it.

He Court of Appeal of Western Central Greece recently published decision no. 88/2021, ruling that the recognition of a US award awarding damages in bitcoin is contrary to Greek public order (in the context of New York Convention 1958 on the recognition and enforcement of foreign arbitral awards).


The facts presented in the Court’s decision are as follows: The Applicant, residing in Germany, was a member of a website owned by an American company. This website allowed its members to conclude credit agreements in crypto-currency (eg bitcoins). The plaintiff made an agreement with a Greek resident to finance his business by granting him a credit in bitcoins. However, the Greek debtor did not fulfill its obligations on the agreed date or repay the loan amount.

The parties had agreed that any dispute between the members of the aforementioned site and any claim relating to an overdue debt concluded through the site will be resolved on the basis of an express agreement to this effect by arbitration by the internet operator. On these grounds of the arbitration agreement, an award was made by an online arbitration tribunal (located in the United States) and the Court of First Instance d’Agrinio (by its Decision No. 193/2018), being competent to recognize the arbitral award in Greecedecided that the arbitral award could not be recognized in Greece for reasons of substantial public order. The plaintiff appealed to the Court of Appeal of Western Central Greece.

The judgment delivered under decision no. 88/2021 of the Court of Appeal of Western Central Greece

The Court of Appeal of Western Central Greece rejected the request for enforcement of the foreign arbitral award, ruling that the enforcement of such an award identifying bitcoin as a decentralized monetary unit (peer-to-peer) and ordering the payment of the debt in bitcoins, is contrary to public order, i.e. to the fundamental rules and principles of the Greek legal order, reflecting the prevailing social, financial and political values.

The Court of Appeal stated that according to the Greek legal order, bitcoin is considered a “digital asset” and not a currency. It is essentially a unit of digital value that can be exchanged electronically and has no physical form. Bitcoin is created and controlled by a network of computers using complex mathematical formulas, and not by any single authority or organization.Due to its nature, the European Central Bank does not consider it as money and it is not issued by any central public authority. For this reason, the ECB does not guarantee anyone’s right to use it as a means of payment. She concluded that the use of bitcoins endangers transactions both for the parties involved and for the state, mainly because any income resulting from the use of cryptocurrency is tax exempt, whereas, in Moreover, this type of transaction is not regulated in Greece.

Finally, the Court of Appeal concluded that the importation of capital in bitcoins and in general of any type of cryptocurrency, regardless of the type of legal matter, violates the internal legal order, encourages tax evasion and facilitates economic crime, causing a insecurity in commercial transactions to the detriment of the national economy.


Following the publication of the aforementioned court decision, the Greek legislators seem hesitant and observe a standby attitude by avoiding to proceed with a structured legal framework of cryptocurrencies. Further away, Greece has not yet issued any specific legal provisions regarding the taxation of cryptocurrency income (either from mining or trading). However, the Independent Revenue Authority (IPRA) has expressed its intention to propose the taxation of income resulting from cryptocurrency transactions as portfolio investment income.

Otherwise, Greece has agreed to follow any EU initiative, starting with incorporating the EU’s Fifth Anti-Money Laundering Directive (5AMLD) under Law 4734/2020 (GG(A) 196/08.10.2020), under from which a broad definition of virtual currencies has been proposed: “a digital representation of value that is not issued or guaranteed by a central bank or public authority, is not necessarily attached to a legally constituted currency and does not possess not a legal status of money or money, but is accepted by natural or legal persons”. legal persons as a medium of exchange and which can be transferred, stored and exchanged electronically”. The said directive also strengthened KYC/CFT obligations and standard reporting requirements. He Hellenic Capital Market Commission is currently awaiting the new European regulation of the European Parliament and some Market Council in Crypto-Assets to be published in order to plan the next legislative initiatives.

Therefore, in light of all the above legislative developments, we can expect a positive approach from the Greek courts on this issue.

However, the conservative approach of the Greek court regarding the enforcement of an arbitration award related to a cryptocurrency payment may reflect similar court decisions to come in other jurisdictions. One would expect that courts in jurisdictions that lack adequate cryptocurrency regulation would indeed be inclined to refuse enforcement in similar circumstances. Notwithstanding the foregoing, it should be borne in mind that the courts of the Contracting States of the New York Convention are free to interpret the public policy test provided for in Article V(2)(b) of the Convention and that accordingly it is also possible for courts in different jurisdictions to adopt a more liberal approach, even in the absence of a regulatory framework on this subject.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

M Ergin MizrahiBeijing Bayar MizrahiAhular Sok. No. 15 Etiler
Tel: 212 359 5700
Email: [email protected]

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