Beyond Borders: How Digital Currencies Are Reshaping International Trade Law
Kushagra Tiwari & Ansh Singhal & Sanidhya SS Chauhan, National Law Institute University, Bhopal
ABSTRACT
The increasing adoption of digital currencies, particularly Central Bank Digital Currencies (CBDCs) and cryptocurrencies, is reshaping global trade and financial systems. While CBDCs offer state-backed stability, regulatory oversight, and improved financial inclusion, cryptocurrencies provide decentralized, borderless transactions that challenge traditional financial structures. However, the integration of digital currencies into international trade presents significant legal and regulatory challenges, including regulatory fragmentation, compliance with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) laws, taxation complexities, and enforceability of smart contracts.
This paper critically examines the divergent regulatory approaches adopted by major economies. China has banned most private cryptocurrencies while promoting the Digital Yuan (e-CNY) for cross-border settlements, whereas the European Union’s MiCA regulation provides a structured framework for regulating crypto-assets. India, meanwhile, has taken a dual approach, advancing the Digital Rupee while imposing restrictions on private cryptocurrencies. These varying regulatory landscapes create trade barriers, compliance burdens, and jurisdictional conflicts that hinder seamless cross- border transactions.
Additionally, the paper explores the role of smart contracts and blockchain technology in automating trade agreements and proposes a Global Digital Trade and Smart Contract Framework (GDTSCF) to harmonize legal recognition, establish an interoperable multi-CBDC settlement system, and create a dedicated dispute resolution mechanism for digital transactions. The study emphasizes the need for coordinated regulatory efforts by the IMF, BIS, WTO, and UNCITRAL to ensure global consistency in digital currency trade regulations.
By addressing regulatory gaps, cybersecurity risks, and financial transparency concerns, this paper provides policy recommendations to facilitate the seamless adoption of digital currencies in international trade, balancing innovation, legal certainty, and economic stability.
