China Looks to Finally Regulate Crypto Industry in What Appears to be a Momentous Moment
Just a few years back, China pretty much dominated all of the world’s cryptocurrency trading and mining markets— with nearly 75% of the entire planets’ mining coming from the Asian powerhouse. However, all of that changed in 2017, when the Chinese government put in place a series of bans that suddenly toppled the nation’s burgeoning alt-asset economy.
However, even with the Chinese government actively clamping down on its crypto industry, a Chinese Central Television broadcast that was aired earlier this year, expounded in detail about the importance of blockchain and how it can encompass a host of other industries including AI, Quantum Computing, IoT.
As a result of this newfound attention, the Chinese government is once again looking to foster a regulatory framework that will allow for blockchain technology to be nurtured in a systematic fashion.
China is Still a Leader When it Comes to Blockchain Technology
Even though the Chinese government has taken a bearish stance towards cryptocurrencies in recent months, many market analysts have noted that the nation’s blockchain industry has been thriving like “never before”.
On the matter, Desmond Marshall, Managing Director of The Floor, had the following words:
“China has had quite a big boom in the tech sector… where people are looking very strongly into blockchain technology,” he explained. “Of course, the popularity of Bitcoin helped in terms of people understanding what blockchain is. In terms of technology, China is actually very welcoming in terms of how these things are being applied.”
He then went on to talk about the friendly financial and regulatory attitude that the Chinese government has towards the blockchain industry (as a result of which everyone from “government agencies to startups” have been employing this technology).
However, with that being said, a question that naturally arises is “If the Chinese are so blockchain friendly, then why are they so anti-crypto?”
The answer to this question as per some analysts lies with the fact that by controlling the flow of crypto, the government is looking to protect a number of its economic initiatives (i.e. the One Belt One Road policy). These initiatives are quite nascent and are highly dependent on various international monetary channels.
The Chinese Blockchain Industry Might be Under Threat Due to a Freshly Drafted Regulation
According to local media outlets, the Cyberspace Administration of China (CAC) has recently released a policy draft that will require all blockchain users to register with the aforementioned government agency— thus effectively stripping blockchain service providers of their right to remain anonymous.
Even though the policy is still up for consideration, if it does get passed in the future, blockchain service providers will have only 10 days to register with the CAC before facing legal recourse. Not only that, Blockchain companies will also be legally obliged to retain backups of user data for six months, as well as to provide sensitive data to law enforcement agencies when requested.
If that wasn't enough, the draft also states clearly that the technology should not be used to “produce, duplicate, publish, and disseminate” any info that has already been banned by existing Chinese laws.
Regulations Will Even Impact Masternode Functionality on Certain Blockchain Networks
Another adverse impact that the aforementioned draft could have (if passed) is that it would affect the “masternode” operability of a number of different blockchain systems existing within China today. For example, if passed, the law will essentially classify blockchain companies as entities offering information services to the public. This classification will in turn allow Chinese authorities to systemically take control of the nation’s blockchain sector.
In the midst of all this, the CAC continues to claim that these new rules will help protect the rights of the nation’s citizens while at the same time promoting the growth of blockchain tech. However, from the outside looking in, it is quite clear that this draft has been designed to increase censorship within the Asian nation.
Even with all of the info that has been made available to the masses, there are still many who believe that the aforementioned regulations are not entirely unreasonable. However, everyone seems to agree on one fact that the regulations will definitely place a new “financial burden on the Chinese blockchain industry’.
On the subject of government interference, Billy Chan, the CEO of DropChain, said that the introduction of such regulations may not be a bad thing for the industry since it essentially looks to “hold people accountable for their actions”.
How true Chan’s words hold in the future now remains to be determined.