Arnone & Giacalone's hybrid AI-smart contract framework targets crypto dispute resolution

A new paper from researchers Gioia Arnone and Marco Giacalone, posted on arXiv (2608.14356), tackles the growing problem of crypto-asset disputes that fall outside traditional legal channels. The authors argue that blockchain's technical complexity, cross-border nature, and fragmented regulations create severe barriers for non-expert users, often leading to digital exclusion. Their proposed solution is a hybrid Online Dispute Resolution (ODR) framework that splits responsibilities between AI and smart contracts.

The framework keeps AI mostly off-chain, powering natural-language interfaces, dispute classification, evidence organization, and plain-language legal guidance. Meanwhile, smart contracts handle limited on-chain functions: dispute registration, timestamping, verification, escrow management, and execution of agreed outcomes. The system is designed to be human-centred, with explainability and human oversight for complex cases. The authors test it against scenarios like crypto-asset seizure, exchange failures, and cross-border scams. They also address governance concerns—algorithmic bias, liability, data protection, smart-contract enforceability—and map the design to the EU AI Act and Markets in Crypto-Assets Regulation, aiming for a legally grounded, inclusive redress mechanism.