China Issues Regulations for Blockchain Firms, Promoting industry’s Healthy Development
Chinese authority, the Cyberspace Administration of China (CAC), has issued the country’s first national regulations for blockchain service providers, which has hit the crypto headline these days in the country.
According to the announcement published on CAC’s website, the guidelines, coming into force on Feb 15, 2019, were designed to promote the healthy development of the blockchain industry and provide effective legal basis for blockchain-related services in the country.
The regulator first affirmed the benefits of the nascent technology featuring tamper-proof and anonymity that could bring opportunities to national development and convenience to social life, at the same time security risks.
To avoid hidden risks, the guidelines require blockchain firms to allow authorities access to stored data, and to go through registry procedures that users’ ID card numbers are required.
Under the new rules, the CAC considers blockchain information service providers as “entities or nodes” that offer information services to the public – “both institutions and individuals” – using blockchain technology via websites or mobile apps.
As one of the country’s first regulatory frameworks drawn up specifically for the blockchain industry, the authority requires blockchain startups to compulsorily register their names, service types, industry fields, and server addresses with it. This information would become publicly available and the regulator would conduct reviews on a yearly basis.
If a firm fails to comply with the regulations, it might face fines ranging from 5,000 to 500,000 yuan (roughly $700-$74,000). Anti-anonymity is particularly stressed since firms fail to conduct real-name registration would be fined much ranging from 50,000 to 500,000. In case of serial offenses, the company might face a criminal investigation.
The rollout of the regulations indicates that the country’s regulatory framework for blockchain industry is basically complete. With the introduction of the new regulations, fraud projects under the mask of blockchain would soon come to light, which is a real boost to the blockchain industry.
China has been rigorously stamping down on all things related to cryptocurrencies – banning initial coin offerings (ICO), crypto trading desks, media platforms, and activities promoting cryptocurrencies. While these haven’t exactly deterred crypto businesses from operating in the country, with many bitcoin preachers around and prominent blockchain projects emerging. The country, favorable to banning in face of potential risks, seems to have a different attitude towards the nascent blockchain.