ALB India Brief, Vol. 4: Bye bye bitcoin?

The Big Story: Musk or no Musk, India’s crypto hopes appear headed for heartbreak

SpaceX founder Elon Musk looks on at a post-launch news conference after the SpaceX Falcon 9 rocket, carrying the Crew Dragon spacecraft, lifted off on an uncrewed test flight to the International Space Station from the Kennedy Space Center in Cape Canaveral, Florida, U.S., March 2, 2019. REUTERS/Mike Blake
(By Elizabeth Beattie) Cryptocurrency, and in particular bitcoin, is having quite the moment. On Tuesday, it vaulted above $50,000 for the first time, continuing a rally that has seen it rise nearly 900 percent since March 2020. Reuters reported that most of the gains coming after electric carmaker Tesla, owned by the outspoken entrepreneur Elon Musk, said it had bought $1.5 billion in bitcoin.
Tesla also said it would accept bitcoin as payment, Reuters added, noting that it was just the latest in a string of large investments into the cryptocurrency “that have vaulted bitcoin from the fringes of finance to company balance sheets and Wall Street, with U.S. firms and traditional money managers starting to buy the coin.”
The crypto craze has not left India untouched. A report in the Business Standard last week found that WazirX, one of the country’s leading cryptocurrency exchanges, had seen daily trading volumes in bitcoin double to 2,000-2,500 from 1,000-1,250 a fortnight previously. And there’s interest from overseas: For example, rapper Jay-Z has launched a bitcoin development fund with Twitter founder Jack Dorsey that will focus on cryptocurrency adoption in India and Africa. Reuters reported the duo will invest 500 bitcoin, currently worth around $24.5 million, in the project.
However, that party might come to an end soon if the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, gets passed. The bill threatens to ban private cryptocurrencies in India, although at this moment there are few details around scope for investors to go on. We know that it outlines the introduction of an “official digital currency” for India, to be issued by the central bank. And the agenda, published online, says the legislation seeks to “prohibit all private cryptocurrencies in India,” while at the same time, allowing for exceptions to promote the underlying technology of cryptocurrency (blockchain) and its uses.
Anirudh Rastogi, founder and managing partner of Ikigai Law, says the market has been affected by this ambiguity, with bitcoin prices in India falling by “seven to eight percent in the first week of February.”
“The only thing which is officially confirmed right now is that the government is expected to introduce the bill in the second part of the ongoing Budget Session. Exactly when this bill will be tabled in Parliament, what does its text look like, what is the exact scope of the ban imposed — none of these details are currently available,” Rastogi says.
“The market has been trying to engage productively with the government on the issue of banning cryptocurrency. Industry members have repeatedly made requests to the government to hold a consultation process before passing a law imposing a blanket ban on cryptocurrency,” Rastogi adds.
This is not the first time India has looked to clamp down on private cryptocurrencies. Back in 2018, a government panel recommended such a ban, but this was subsequently challenged in the Supreme Court by a number of exchanges and traders, and the court ruled in their favour.
Rastogi says that many “progressive jurisdictions” have regulated cryptocurrency instead of banning it, including Singapore, the UK, the Netherlands, and Japan.
But when it comes to legality, Rastogi says India appears to be “following China's legal position on cryptocurrency, to the extent that it wants to ban private cryptocurrency trading and only have a central bank digital currency.”
But China has not banned cryptocurrency completely, as it allows users to own cryptocurrency, he adds. “If implemented, India's proposed ban would go beyond China's legal position,” Rastogi notes.

What’s happening: Coochie Koo

Twitter and Koo app logos are seen on smartphone in this illustration taken, February 10, 2021. REUTERS/Dado Ruvic
Following on from last week’s The Big Story, Twitter continues to remain under fire in India, with the government rebuking it for not complying with orders to take down certain content, and lawmakers urging followers to join homegrown rival Koo. In case other social media apps were feeling left out, IT minister Ravi Shankar Prasad also told Facebook, LinkedIn, and WhatsApp that they were welcome to operate in India, as long as they “follow the Constitution of India… [and] abide by the laws of India.” Unsurprisingly, this has sparked a debate on compliance and free speech, Reuters adds.
Speaking of other technology companies facing strife in India, Amazon had a setback recently after a Delhi court overturned an order that had blocked its partner, Future Group, from selling its retail assets for $3.4 billion. The flip-flopping court rulings is testing the patience of foreign investors, says Bloomberg. Also dropping overnight, a bombshell Reuters report on how Amazon has been playing a cat-and-mouse game with India's regulators.More on that very soon.
But it’s not like the Indian government does not have a lot to worry about either. Cairn Energy recently filed a case in a U.S. district court to enforce a $1.2 billion arbitration award it won in a tax dispute against India, and this could lead to the seizing of Indian assets overseas, including bank accounts and even Air India planes or Indian ships. And China’s Caixin feels ByteDance and other app investors from the PRC might have credible claims to pursue against the Indian government for violating protections under the China-India Bilateral Investment Treaty.
And an interesting development in the legal sector: Legally India believes foreign law firms might be able to open offices in the Gujarat International Finance Tec-City special economic zone.

Further afield: Alternative no more

Alternative legal service providers (ALSPs) appear to have found widespread acceptance in mainstream of the legal industry, according to a report from Thomson Reuters in partnership with The Center on Ethics and the Legal Profession at Georgetown Law and the Saïd Business School at the University of Oxford. The survey of 514 decision-makers at law firms and corporate law departments across the U.S., UK, Canada, and Australia found almost 80 percent of law firms and more than 70 percent of corporate law departments using ALSPs. ALSPs are now “moving from a simple cost-saving proposition to a true partner than can be counted on for expertise, tech-enabled solutions, and new ways of doing business, especially during the ongoing pandemic crisis,” the report said.
We had mentioned in this space last week that ESG was becoming critical for the legal industry. The Global Legal Post has a handy timeline of recent developments, while Legal Cheek has a panel discussion on the subject from lawyers at the UK’s Womble Bond Dickinson.
Cybersecurity is another topic of the moment. A hacker claims to have stolen files belonging to Jones Day, the Wall Street Journal reports – although the firm itself disputes the breach. According to Bloomberg, it is the second major law firm in two weeks to have private data exposed as a result of a breach at Accellion, which provides file transfer and other services for a number of firms; the first was Goodwin Procter.
COVID impact update: Law firms in the UK have been rewarding staff with regular or “spot” bonuses to make up for pay cuts or freezes made when the pandemic first hit, reports Personnel Today, which added that many firms have reinstated pay reviews planned for the first half of 2020, either later in the year or at the beginning of 2021.

Your need to read: Five links to improve your life

With working from home becoming increasingly accepted within the legal industry, will more practitioners consider becoming contract lawyers, asks Lawyers Weekly.
Another reason why law firms should allow for flexibility: It could be an important factor in retaining women lawyers, says a report in the Canadian Lawyer.
And while embracing flexibility, law firms should eradicate fear-based cultures, says Lawyers Weekly.
On the subject of fear: With hacking attacks remaining an ongoing menace for the legal industry (see above), cybersecurity company CySure offers five steps that law firms can become proactive enough to combat the scourge.
But not all data is scary. Forbes talks about how law firms can become more effective at using “intent data” to target their marketing campaigns at companies that are in the market for the services they provide.

And finally: Quote of the week

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