Law Decoded: India ponders going full China on crypto, Nov. 22–29

Are big emerging economies more likely to gravitate toward blanket crypto bans? China has set a precedent, and now it appears as if India could be weighing a similar policy direction: A bill containing a proposed ban on all “private cryptocurrencies” will go in front of the nation’s parliament sometime this winter. The measure is designed to clear the way for India’s central bank to advance its digital currency agenda. Whether a sovereign central bank digital currency can coexist with a thriving market of “private” cryptos will be one of the central questions of the looming CBDC age, and it is clear that governments will be tempted to use their coercive authority to tilt the playing field in favor of the centralized money that they control.

Below is the concise version of the latest “Law Decoded” newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.

Lok Sabha to consider policy options

One of the 26 new bills that the Lok Sabha, the lower chamber of the Indian parliament, will take on during the winter session that kicks off this week is The Cryptocurrency and Regulation of Official Digital Currency Bill. The document outlines a set of measures meant to facilitate the creation of a CBDC, including a proposed ban on all “private” digital assets, with a few exceptions. The exact implications of the legislation remain a subject of much speculation, with analysts offering diverging interpretations of the scope of the potential ban. The market, however, responded in a more consolidated way, as crypto prices on the major Indian exchange WazirX tanked on the news. 

Powell to remain, Omarova up in the air

United States President Joe Biden nominated Jerome Powell, the current chair of the Federal Reserve System’s Board of Governors, for another four-year term at the helm of the Fed. During one of his recent appearances in front of Congress, Powell stated that a China-style blanket ban on crypto was not in the cards but said that stablecoins needed greater regulatory oversight. During Powell’s current tenure, which is set to expire in February 2022, the Federal Reserve has been actively exploring the possibility of issuing a CBDC, as well as teaming up with federal regulatory agencies for crypto-focused “policy sprints” aimed at identifying and remedying gaps in digital asset regulation. 

South Korean NFT politics

Crypto taxation remains a hot-button political issue in South Korea, as the government is sending mixed signals on whether new rules, including a 20% tax on crypto income, will go into effect starting Jan. 1, 2022. Which types of digital assets fall under the updated tax code remains murky as well. While the nation’s Financial Services Commission had previously stated that nonfungible tokens, or NFTs, are exempt from taxation, the agency’s chairman stated the exact opposite last week. Furthermore, the regulator has come forward with a set of strict reporting requirements for digital token issuers, with jail time prescribed for those who fail to comply.