China Introduces New Blockchain Regulations

The Cyberspace Administration of China (CAC) announced on January 10 that the Chinese government will “compel” Blockchain companies to take down undesirable content from their platforms and give them full access to privately stored data to verify the identities of the users.

It seems that China is cracking down hard on the cryptocurrency and Blockchain industry; but given its track record, it does not come as a surprise that the government wants complete access to private data. However, it does not change the fact that China’s move to access private user data is less to verify someone’s identity and more to keep everyone in check.

The CAC’s official press release said that the Internet Information Service Management Measures Act will come into effect from February 15, with the goal to “promote the healthy development of Blockchain technology and related services.” Additionally, it stated that the rules that were laid down were built to “safeguard national security and public interests, [and] protect the legitimate rights and interests of citizens.”

China has been cracking down hard on cryptocurrency companies since 2017, starting with it outlawing Initial Coin Offerings (ICOs) and preventing domestic digital currency trading platforms from operating within China’s economy.

However, the government seems to be more tolerant of the technology that goes behind all of it – distributed ledger technology, because of its widespread usage capabilities that extend beyond just cryptocurrencies. Many industries including oil, shipping and agriculture are also starting to show interest in Blockchain.

However, after the Act comes into effect, every Blockchain company in China will have to make it mandatory for its users to register with their actual names, national identity and their phone number, while simultaneously removing everything from their platform that the Beijing administration deems undesirable. Additionally, companies will be 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 implemet 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.”

According to the CAC, these new regulations are a part of China’s attempt at “reinforcing” the Blockchain industry in the country, and that it aims to “improve industry self-discipline and standards.”