China’s Cybersecurity Regulator CAC Wants Feedback on Its Blockchain DLT Rule Proposal
China’s cyberspace administration recently announced that it wanted feedback up to November 2 on proposed rules it published. These rules are designed to regulate the blockchain ecosystem within China. The rules have received mixed reactions from DLT experts.
The Rules are Strict
The Chinese regulator has drafted rules that will protect national security interests and protect companies and the public. At the same time, these rules will facilitate the growth of the ecosystem in China. In the legislation, DLT companies will need to store data for inspection going back up to six months. Besides that, real-name registration will be required.
The document from the regulator proposes that DLT companies will work with the government to inspect and release all data and needed technical assistance. Besides that, blockchain businesses will need to register within 10 days after they start a business. In such a case, the company will need to record the name and server addresses of customers. If they fail to do this, they risk being suspended.
If they refuse to rectify any issues raised by the government, they will have the license canceled.
Besides strict monitoring and reporting, the regulator wants the industry to come up with its own self-regulation. The rules want the industry to grow its self-regulation and come up with standards for the industry.
They will also have to educate the service providers and create a credit rating mechanism for the industry.
Players in the nation’s blockchain industry have expressed mixed feelings about these rules. For instance, Yang Dong the VP of the Renmin University China Law School was not enthusiastic about the rules. He said that these rules could prevent the growth of innovation. According to him, the rules would cause obstacles to entities and the ability to innovate. According to him, the field should be left neutral. Thus, the need for a draft policy should be viewed with suspicion.
A Ph.D. student and the creator of a blockchain hub in Shanghai, Tamar, said that this legislation conflicted the government’s commitment to this sector. She warned that the rules would place extra financial burdens on startups. This is because the rules might place new and costly requirements on them.
Tamar noted that China had been supportive of the technology. However, she noted that the government maintained close supervision of the entire industry. Besides that, the authorities are already controlling it extensively.
However, Billy Chan, the CEO of Dropchain had a different opinion. He said that these proposed rules were not all negative. The CEO said it was unfair to claim that the government was stifling innovation in the industry. To him, this is an attempt by the authorities to bring accountability to the industry.
It is quite clear that there are numerous opinions regarding the proposed rules. However, it is important to have rules regulating the industry if it wishes to grow out of the shadows and become mainstream.
What is clear is that the government of China recognizes the power of the blockchain. Their decision to ask for feedback is positive.