Two Giants, Two Bets: How China and India Are Writing Their Own Rules for the Digital Economy

On the same day last week, two of the world's largest emerging markets arrived at consequential decisions about the digital economy — and reached almost opposite conclusions.

In Beijing, China's Supreme People's Court announced plans to study adjudication rules for cryptocurrency and artificial intelligence disputes, even as the country maintains an active ban on most crypto trading and mining. The move signals a quiet institutional rethinking: if digital assets cannot be wished away, perhaps they can be handled more precisely.

Simultaneously in New Delhi, India's Supreme Court upheld a 28 percent goods and services tax on online gaming, dismissing industry petitions that had argued the levy was retrospective, disproportionate, and structurally misapplied to a sector the industry insists is skill-based rather than gambling-adjacent. The ruling closes a lengthy chapter of legal uncertainty for gaming firms — and confirms that New Delhi intends to treat the sector as a revenue-generating entertainment service, not a technology platform deserving special dispensation.

Together, the two developments illuminate a fracture running through the Global South's approach to digital regulation. When the world's most populous nations agree on anything, the global tech industry takes note. When they diverge on framework, the divergence itself becomes the story.

India's Online Gaming Industry Hits a Tax Wall

India's Supreme Court delivered its ruling on the GST question on 27 May 2026, with the bench finding no grounds to interfere with the government's interpretation that online gaming platforms fall within the taxable ambit of services subject to the 28 percent levy. The decision rejects petitions from major gaming operators who had argued the retrospective application of the tax — imposed on bets and entry fees — was legally impermissible without explicit legislative amendment.

The sources do not specify the precise composition of the bench or the legal reasoning in the full judgment, which was still being circulated at time of publication. Industry estimates cited in prior reporting had suggested the tax burden was becoming unsustainable for several mid-tier operators, though those figures have not been independently verified by Monexus.

India's GST Council had approved the 28 percent rate in mid-2023, framing it as an equating measure: if gaming companies offered wagering-adjacent products, they should be taxed accordingly. The industry counter-argued — and continues to argue — that skill-based games like fantasy cricket and rummy attract fundamentally different user demographics and mechanics than casino-style gambling. The Supreme Court, at least for now, has declined to accept that distinction as a tax-exemption basis.

China Courts a Different Reckoning

The announcement from China's Supreme People's Court carries less immediate coercive weight but may prove structurally more significant over time. Court officials described plans to study — not yet draft — adjudication rules for crypto and AI disputes, a process that would precede any formal codification into enforceable jurisprudence.

The distinction matters. China has maintained a crypto trading and mining ban since 2021, and enforcement has been sporadic rather than comprehensive: authorities shut major exchanges when capital flight risks spiked, but peer-to-peer and overseas-platform trading continued through gray channels. The ban's principal achievement, from Beijing's perspective, was reducing the most visible forms of speculative crypto activity while managing the political optics of a blanket prohibition.

The new study suggests the court's institutional apparatus is preparing for a more sophisticated reality. Digital asset disputes — whether over wallet custody, smart contract performance, or tokenized securities issued by Chinese-adjacent entities offshore — are arriving at Chinese lawyers' desks regardless of the formal ban. A structured adjudication framework would give domestic courts tools to handle those disputes coherently, rather than improvising around a prohibition whose enforcement horizons are uneven.

That China is simultaneously studying AI governance rules alongside crypto rules is not coincidental. Both sectors occupy a similar regulatory anxiety: they are too economically significant to ignore, too volatile to fully liberate, and too novel for existing commercial law to handle cleanly. The Supreme People's Court's working groups will likely draw on overlapping doctrinal frameworks for both — liability assignment, evidentiary standards, cross-border enforcement — even as the political treatment of each sector diverges.

Structural Frame: Two Philosophies Toward Digital Sovereignty

The contrast between the two rulings reflects different political calculations about how much regulatory space a digital economy requires — and who benefits from it.

India's gaming tax decision reflects what has become a recognizable posture in New Delhi: treating large-scale digital platforms as revenuegenerating enterprises subject to the same fiscal expectations as any other service sector. The 28 percent GST does not distinguish between foreign and domestically headquarter gaming companies, but its practical effect falls hardest on platforms whose margins cannot absorb a tax calibrated for gambling-adjacent services.

This is not a uniquely Indian impulse. Several jurisdictions have attempted to classify gaming and betting services at higher GST rates, arguing that the wagering mechanism — regardless of the skill element — creates taxable value. What distinguishes India's position is the scale: a market of several hundred million active digital gaming users, generating revenues in the billions of dollars annually, now confronts a tax structure that smaller markets have not had to arbitrate at this volume.

China's approach, by contrast, suggests a willingness to let institutional frameworks develop before committing to a final regulatory settlement. The Supreme People's Court's study phase is explicitly exploratory; the formal rules that eventually emerge could look quite different from what the market currently expects. That deliberative pace has a parallel in China's broader approach to AI regulation, which has moved from broad principle documents to sector-specific rules over two to three years rather than in single legislative bursts.

Both approaches share a common thread: neither India nor China appears willing to treat digital economy governance as a domain where existing international frameworks should automatically govern domestic policy. Each is building law from first principles suited to its own political economy, financial system architecture, and technological industrial priorities.

Stakes: The Industries Waiting on the Outcomes

The near-term losers in India are clear: online gaming platforms whose unit economics cannot sustain a 28 percent levy alongside platform fees, customer acquisition costs, and payment processor charges. Medium-term consolidation is likely as smaller operators exit or merge.

The near-term beneficiaries are equally identifiable: the Treasury, and by extension the fiscal positions of state governments sharing GST revenues. Whether the tax actually raises the projected revenue — if gaming volumes compress under the higher cost burden — remains genuinely uncertain and will not be knowable for several quarters.

In China, the question is less about immediate losers than about who gets a seat at the table when formal rules eventually emerge. Crypto-adjacent companies that have maintained offshore operations are watching the study process closely. If the Supreme People's Court produces adjudication rules that address custody liability, smart contract enforceability, and cross-border evidence standards, those rules could create a functional legal framework for digital asset disputes even without lifting the underlying ban.

That outcome — law that governs behavior without legitimizing the activity — has precedents in other domains where Chinese authorities have preferred managed toleration to either full prohibition or full legalization. The current study suggests Beijing is at least considering that middle path for crypto, even if it has not yet committed to it.

For global technology companies operating across multiple jurisdictions, the implication is familiar but newly specific: compliance architectures built for one regulatory regime cannot be assumed portable. India's tax frameworks, China's AI governance rules, the European Union's digital markets legislation, and the United States' sector-by-sector approach to platform regulation are each developing on their own logic. Firms with global ambition must now maintain parallel compliance stacks rather than a single universal framework.

The two rulings on 27 May make that fragmentation concrete in ways that boardroom strategy documents cannot — and serve as a reminder that the rules of the digital economy are being written, in real time, by actors who do not always consult each other first.

DESK NOTE: The wire carried China's announcement as a legal-development story and India's as a tax-and-litigation story. This piece threads them together to surface the more structural point: both are exercises in digital sovereignty, and they are pulling in opposite directions. The hero image is from Cointelegraph's own production in the Telegram thread.

Wire provenance

This editorial synthesis draws on the following public wire/social posts:

• https://t.me/livemint_news/15267