China

Chinese Internet Censor Releases Crypto Regulation Draft Governing Blockchain Ventures

The proposed draft was published on the CAC’s (Cyberspace Administration of China) website on Friday until November 2nd, 2018 for public consultation. However, the date informing the effect of these rules is still not mentioned on the site.
 
The proposal states that startups of blockchains register their original names, service types, server addresses, censor postings, and store user data within ten days of setting the unit with CAC.
 
Also, the venturing operating companies that provide blockchain services have to make sure that any data or information from Chinese users shall not be posing any threat to national security whatsoever, and to make user data storage easy access for inspection by legal authorities.
 
Before officially applicable to the rules and regulations to blockchain service companies, public feedback is being considered.
 
In history, the Chinese government in December 2016 accepted and added blockchain to its five-year technology plan.
 
The Chinese government banned all ICO’s (initial coin offerings) in China last September 2017, also the operations of Chinese exchanges were ceased. This led to the closure of 90 cryptocurrency exchanges and 85 ICOs in just a year. Further, the government is abolishing accounts related to crypto in social media networks like WeChat.
 
In January and February 2018, the government imposed regulations on over-the-counter markets, foreign crypto exchanges, and ICO websites.
 
President Xi Jinping in his speech mentioned the importance of blockchain and described it as part of a technology revolution in May 2018.
 
In the world’s bitcoin mining operations, accounting three quarters covering 95% of trading volume, China maintains its hold.
 
The proposed new rules with existing regulations for social media platforms powered by blockchain are being considered after Beijing’s cybersecurity law came in action in 2017.
 
The rules are under development; this indicates the country’s new defining strategy in simple words is “blockchain, not Bitcoin” when it comes to cryptocurrency market affecting crypto coins in different ways.
 
The most prominent crypto assets of China- NEO, EOS, and VeChain- may find themselves in a hardship sphere. Bitcoin hashing power may also get functionally impacted and become worthless.
 
Ethereum, a decentralized entity may not be regulated by the channels of these laws so additional laws to abolish decentralized networks should also be coupled.
 
Xu Kai, a lawyer from Beijing wrote by criticizing, “The Chinese new draft policy also lacks protecting rights of blockchain’s immutable large data with no enforcement procedures.
 
Publicly, Blockchain is appreciated by masses in China; still, it has the most restrictive rules to follow.
 
The reason behind these regulated strategies may likely be geopolitical. While cryptocurrencies are not completely accepted in China, investing in blockchain research and its real-world uses is still a centre of interest. This critical question “Is this strategy sustainable?” is debatable.