The NSW District Court, hearing a defamation claim, was asked to force a plaintiff to put $20,000 into a court-controlled bank account.

The amount would cover some of the defendant's expected legal costs, should the plaintiff lose or withdraw the case.

A lawyer for the defendant said the plaintiff's cryptocurrency account might be in Australian dollars but still represented a highly unstable investment.

Judge Judith Gibson said she was prepared to accept cryptocurrency was volatile.

"However, this is a recognised form of investment," she said in a judgment this week.

Addressing the volatility issue, she accepted the plaintiff's undertaking to give the defendant's solicitor monthly statements for the investment account.

He'll also have to alert the solicitor when the account drops below $20,000, should that occur.

"I can see the desirability of the defendant receiving prompt notification of any drop in the value of the account," the judge said.

"These are uncertain financial times."

Breaches of undertakings can lead to the defaulting party being found in contempt of court.

Australian Associated Press