China Introduces Strict Blockchain Regulations


The regulations are meant to simultaneously strengthen national security and encourage the development of blockchain technology. Several of the provisions hint at possible censorship.

Today, January 10, China’s technology and internet regulator (and censor), the Cyberspace Administration of China (CAC), released the final draft of regulations governing the use of blockchain technology in the country. According to the publication, draft legislation was reviewed and approved by the Office of the State Council’s Department of Internet Information and will become law on February 15 of this year.

To conduct business within the People’s Republic of China, blockchain service providers – any company providing “information services to the public through internet sites and applications based on blockchain technology or systems” – must henceforth adhere to strict regulations, including the implementation of ID verification for all users.

The regulations explain that Chinese blockchain service providers are forbidden to use their platforms for activities that present a danger to “national security, disrupt social order, and infringe on the legitimate rights and interests of others,” or publish any content and information prohibited by law. Users who do are subject to “warning, restriction, and account closure.”

Additionally, blockchain service providers in China will be responsible for maintaining a six-month record of everything put on the platform, which will be periodically inspected by the internet information office governing the specific region where the blockchain company is located. These governing bodies are directly controlled by China’s central government. Any company found to be in violation of these new regulations will be subject to fines and even prosecution. 

Per an October 2018 article in the South China Morning Post, the first draft of these regulations was published in response to an open letter put on the Ethereum blockchain in April of last year. The letter, written by a Chinese activist, outlines an “alleged cover-up of sexual harassment” at a university in the 1990s. The activist first published the letter on Chinese social media sites such as WeChat and Weibo, but was censored. The anonymous activist then attached the letter to a publicly available transaction on the Ethereum blockchain, prompting a response from the Chinese government.

The CAC states that these new regulations are meant to “safeguard national security and social public interests, protect the legitimate rights and interests of citizens, legal persons, and other organizations, and promote the healthy development of blockchain technology and related services.”

Although the Chinese government has been historically wary of cryptocurrency, even banning companies and investors from participating in initial coin offerings, the country has been accepting of blockchain technology, at least on its own terms. In September of last year, ETHNews reported that China’s supreme court had declared blockchain evidence legally binding. Additionally, just last week, the China Banking Association launched a new blockchain platform for trade finance.

Translations by Google.

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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