Cyberspace Administration of China (CAC), the main Internet censor of the Chinese government, drafted a law establishing rules for regulating activities of blockchain companies.
Before officially introducing the rules, the agency plans to receive feedback from the public. Citizens and representatives of the blockchain industry can leave their comments on the draft law titled "The Regulation for Managing Blockchain Information Services". The authors of the regulatory framework accept public suggestions until November 2. The new requirements will apply to any blockchain service provider in China.
Key points of the bill:
- In accordance with the developed rules, blockchain startups must register with the agency within 10 days after their creation.
- Also, companies are required to provide CAC with their name, server addresses, and type of service. This data, according to the bill, will become publicly available after registration and the CAC will conduct inspections of the registered blockchain companies activities on an annual basis.
- Suppliers of blockchain services in the areas of news journalism, education, and pharmaceuticals are required to obtain appropriate licenses in the responsible structures along with registering with the CAC.
- Service providers are not allowed to use blockchain technology for the production, duplication, publication, and distribution of information or content prohibited by the Chinese law. This item was added due to the fact that some companies resort to using the distributed ledger technology (DLT) to circumvent the censorship introduced in the country.
- The regulator proposes to oblige blockchain service providers to verify users by collecting national identification numbers or mobile phone numbers. Projects must keep this data for 6 months and pass this information to law enforcement agencies if necessary.
WHY IS IT IMPORTANT?
- The new rules, if adopted, will be one of the first legislative norms developed specifically to control the blockchain industry in the PRC.
- China is actively using DLT. For example, in early October, the so-called Blockchain Trial Zone appeared in the Free Trade Zone (FTA) of Hainan, according to the traditional Chinese news provider cnLedger. The purpose of creating such a zone is declared support for revolutionary blockchain-innovations. Various departments are also implementing DLT. Recently, the the justice department of Zhongshan launched a blockchain platform to track citizens released on parole.
- At the same time, cryptocurrency trading in China is prohibited, although traders are looking for different ways to circumvent the ban. After the ICOs have become illegal, too, many local exchanges brought servers abroad, receiving offshore registration.
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