China Announces New Regulations for Blockchain Companies to ‘Promote Healthy Development’
China is coming down hard on blockchain companies, even though the government appears to favor blockchain over cryptocurrency. The Cyberspace Administration of China (CAC) announced new regulations on Jan. 10 that will compel blockchain platforms to eliminate “undesirable” content while giving authorities access to private stored data and to check the identity of users.
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‘Rules to Promote Healthy Development of Blockchain Industry’
China’s Blockchain Information Service Management Regulations, which come into force on February 15, will “promote the healthy development of blockchain technology and related services,” CAC claimed in a press release. It said the rules are built to “safeguard national security and social public interests, [and] protect the legitimate rights and interests of citizens.”
China has clamped down on virtual currencies since 2017 when the government outlawed initial coin offerings and prevented domestic cryptocurrency exchanges from operating within the Asian country’s economy.
But its government appears to tolerate distributed ledger technology on account of its many uses outside of the cryptocurrency realm. Industries such as oil, shipping, and agriculture are starting to show interest in blockchain, the technology which underpins crypto assets like bitcoin.
Stringent Registration Requirements for Users
Blockchain companies will now be required to register users with their actual names and national identity or mobile number while eliminating content that Beijing deems unfavorable. Companies are expected to “immediately release” stored data that the state regards as a threat to or contravening existing national laws. The new regulations state:
The blockchain information service provider shall implement the responsibility for information content security management, and establish and improve management systems such as user registration, information review, emergency response, and security protection … If the user does not perform real identity authentication, the blockchain information service provider shall not provide related services.
Companies will also be required to report to the government any new updates to their product range and to “accept social supervision” while adhering to strict registration requirements. Entities found to be in violation of the rules could be subject to fines or prosecution, the CAC said. Fines range between 5,000 yuan and 30,000 yuan ($700 to $4,400).
The CAC claims in its new regulations that it is working to reinforce the blockchain industry. It says it intends to “strengthen industry self-discipline, improve industry standards,” and to guide blockchain platforms “to promote industry credit evaluation system construction,” among other things.
What do you think about the new rules guiding the operation of blockchain companies in China? Let us know in the comments section below.
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