The rules of international law gently transcend the physical boundaries of our world and extend their influence into the mysterious realm of cyberspace. State practice confirms digital sovereignty, yet rival camps offer divergent approaches. Non-Western states, such as Russia and China, advocate for strict national control, asserting cyber sovereignty to safeguard their digital infrastructures. In contrast, Western countries like the USA and EU Member States support an open, global internet governed by cooperative principles. Further, this article examines the challenges of applying the traditional notion of territorial sovereignty in cyberspace, where clear borders are absent, and evaluates potential solutions. Among these, the competence/function theory and the Functional Equivalent of the Border are explored as means to reconcile competing interests and advance a balanced framework for regulating digital activities while protecting national sovereignty and individual rights.