The Impact of China’s Fintech Regulatory Sandbox on Domestic Blockchain Industry
People’s Bank of China (China’s central bank) supported Beijing to take the lead in launching the fintech innovation supervision pilot nationwide, exploring the construction of the Chinese version of the “regulatory sandbox” last December. As one of the most challenging innovations in the field of fintech, blockchain technology naturally entered the key supervision scope.
As soon as the “regulatory sandbox” came out, there was a heated discussion in the space of blockchain and cryptocurrency. Some people think this is a good thing for the blockchain industry to take off, while others think that the introduction of regulation may bring new constraints.
On January 14, the Chinese version of “regulatory sandbox” made substantial progress. The website of China’s central bank publicized the first batch of six pilot applications of fintech innovation supervision in 2020.
The first batch of applications involve 11 financial institutions or technology companies, focusing on cutting-edge application of Internet of things, big data, artificial intelligence, blockchain, API in the financial field, covering multiple application scenarios such as digital finance.
There are three basic reasons for the state to create a regulatory sandbox for blockchain.
First, there are many enterprises engaged in financial activities in the area of blockchain, in fact, they want to escape from supervision at the beginning, such as some crypto exchanges.
Second, there are still many large financial institutions and state-owned enterprises that are not willing to enter the emerging market.
Third, so far, in view of the development of blockchain technology, the state has not been able to make a comprehensive cut into blockchain in terms of system and rule-making.
Most blockchain practitioners in China are more concerned about which way to determine the relevant regulatory system and rules, and what core data requirements enterprises need to face and what kind of evaluation organization to prove the rationality of these things amid it.
In 2017, China began to implement the mode of regulatory sandbox. Then this year, a Chinese sandbox called “industrial sandbox” was proposed for China’s complex industrial structure, which is more suitable for China’s industrial ecology.