China’s Cyberspace Administrator to Start Regulating Blockchain Startups

Following the published draft policy, the government’s internet censor, the CAC (Cyberspace Administration of China), is calling for a public debate before putting the regulations into effect. If enacted, the regulations would govern any Chinese entity regarded as an information service provider in the blockchain industry. That will essentially set the basis for governing the blockchain market in the country.

In the draft, the CAC defines Blockchain information service providers as nodes or entities that provide the public with information services using blockchain technology. That can be both individuals and institutions that provide services through mobile apps or desktop sites.

As part of the proposed 23 articles, featured in the draft, the agency requires all service providers in the blockchain industry to register with them. The registration must be done within ten days of launching the products or services for public use.

According to the proposed draft, blockchain startups will need to register their names, industry fields, service types, and server addresses. The information will be publicly available through the CAC and will enable the agency to conduct annual reviews.

While the CAC hasn’t been clear on the type of blockchain startups that fall under its definition, Chinese industry experts reckon that the regulation will impact super-nodes on various blockchain networks.

Expressing his views about the issue in a post, the founder of BTC TOP mining pool Jiang Zhuo’er revealed that all the nodes would need to comply with the regulation. Citing the EOS network, Zhuo’er stated that all the 21 supernodes, operated by an individual or company, would need to be fully compliant with the proposed regulations.

Moreover, Blockchain service providers working in different highly regulated fields in China, like education, publishing, pharmaceuticals, and news reporting, must obtain licenses from specific regulatory agencies before registering with the CAC.

Also evident in the proposed rules is that the service providers will no longer be allowed to use the blockchain to produce, publish, duplicate or disseminate information prohibited by the Chinese government. In earlier reports, the blockchain technology had been utilized for bypassing internet censorship during a recent pharmaceutical scandal and the #Metoo campaign in China.

Additionally, the proposed regulations will require information service providers in the blockchain industry to gather their users’ information by the Know-your-customer measures. That will essentially involve collecting their mobile phone numbers and national I.D numbers. According to the draft policy, the service providers will need to store the logs published by the users for six months and submit the information to the agency when needed.

Currently, the CAC has set a deadline until Nov 2nd for the public to file comments and suggestions before the agency proceeds with the next step.