Assessing EU Consumer Protection Risks in AI-Driven Blockchain Tokenized Finance through Smart Contract Design

Abstract: In the era of new technologies, financial services are offered mainly in digital systems. This means that consumers interact with interfaces, prompts, and automated processes on artificial intelligence-driven blockchains. These actions collectively form the terms of the contract. Smart contracts are immutable self-executing contracts whose terms are written directly into the blockchain code. In turn, algorithms created by artificial intelligence influence how risks, prices, and opportunities are presented to the consumer. From the consumer’s perspective, a contract is no longer something read and negotiated, but something discovered through design. This reality raises challenging questions for EU consumer law, which is based on the assumptions of textual transparency, informed consent, and effective ex post control.The aim of the study is to investigate the legal risks of smart contract design as an important contractual component in the context of consumer law, with a focus on three key areas of EU consumer law: clear contract terms, fairness, and access to legal remedies. The main research question is: Does smart contract design in AI driven blockchain tokenised finance comply with EU consumer law standards on transparency, fairness, and effective remedies as interpreted by the ECJ? Previous studies have focused on the substantive analysis of smart contracts, revealing their partial non-compliance with EU consumer protection standards. This study also analyses the design of smart contracts as an important contractual component that can pose significant risks to consumer protection.This research uses a doctrinal legal method based on EU law and CJEU case law, and the comparative method to uncover differences between EU Member States. The comparative method is also used because the EU must guarantee a uniform high standard of protection for consumers.The study analyses how the CJEU has interpreted important consumer protection concepts, such as the comprehensibility of the rules, the imbalance of the parties, and how well the legal protection works. This analysis is used to conclude the compliance of the design of artificial intelligence-driven smart contracts in blockchain tokenised financial services with the consumer protection standard. From a legal perspective, the author analyses how design choices affect what consumers understand and how they act.The author conclude that automation poses certain risks to consumer protection. Automated processes reduce consumer decision-making to a few moments. Disclosure of information through interfaces can make it difficult for consumers to process information and make them rely more on system signals than on their own understanding. Since technical actions cannot be undone, traditional dispute resolution methods are less effective in such situations. These factors make it difficult to apply current EU consumer law standards in practice.

Keywords: EU consumer law, blockchain tokenization, smart contract design, artificial intelligence

DOI: 10.54941/ahfe1007205

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