The hostile attitude of China towards the cryptocurrencies is no news. The communist party ruled country has already put a ban on the digital currencies since 2017 although when it comes to blockchain technology, the Chinese government has adopted a bit soft stance. On January 10, the Cyberspace Administration of China (CAC) announced new operating procedures and regulations for the blockchain companies. According to the new regulations, blockchain companies have to provide Chinese authority with access to the identity of the users and their data stored with the organization. Besides, the new regulations also mandate the companies to eliminate any kind of undesirable content that could have implications for the country’s national security and public interest.
New Blockchain Regulations
The new regulations named Internet Information Service Management Measures will come into effect from February 15 next month. According to CAC, these measures will help to promote the healthy development of the blockchain industry and related technology sectors in China. The agency further elaborated that the new regulation has been drafted keeping in mind the national security, social interests, and will help to protect the legitimate rights of the investors and the citizens.
So that you know, China banned the initial coin offerings (ICOs) in 2017 and passed legislation to bar cryptocurrency exchanges operating in its territory from carrying out crypto business. The decision was seen as a clampdown of the authorities on the digital currencies although the government seems more open to the idea of blockchain owing to its merits in many business sectors besides the cryptocurrency. The countries across the globe are harnessing the power of blockchain in sectors like power and energy generation, transportation, logistics, supply chain, financial technology services, oil, agriculture, and shipping, etc.
The specific details of the new regulations revealed that blockchain companies have to register the users using their names, national identity, or mobile phone number. The companies need to eliminate any other kind of content that the Beijing authorities deem unnecessary or unfavorable. In case, the state finds anything against national security or contravening to the law, and the companies need to immediately release the stored data to the authorities. An excerpt from the new regulations states that the service provider must implement the responsibility for the overall content and should strive to improve the management systems in various areas like registration of the user, review of the information, emergency response system, and the security protection system. It further added that in case of any failure on the part of the customer to provide authentic information, the service provider should not provide the services.
The new regulations also require the companies to report any new update they made to their business model, product range, etc. and also have to agree to social supervision in addition to adhering to the strict registration regarding the user enrollment. Any company found acting in contravention to the new regulations will be subject to provisions of prosecution or fine, as per the CAC. The range of financial penalty is in between $700-$4,400 (5,000 Yuan – 30,000 Yuan). The authorities claim that the new regulations will reinforce the prospects of blockchain industry by inculcating the spirit of self-discipline which, in turn, will help in improving the standards. The new regulations also help the blockchain companies to promote the construction of a credit evaluation system of the industry.