The division of government regulators in China is stepping up the requirements for all things related to operating a blockchain technology business as well as the internet providers that allow the systems to operate in the country. In 2017 cryptocurrencies specifically were banned completely from use in the country, which had previously been one of the highest traffic areas for cryptocurrency use. The country is still where the majority of the Bitcoin network mining occurs, and even much of the blockchain technology development for consumers.
One company recently began using a blockchain network to facilitate a rewards system for using their products often. China Mobile is highlighting the value of blockchain technology to their consumers through household appliances such as TVs and water filters, but allows the rewards to be spent only on further products and services from the company. In this way, it is not used as a currency. This looks to be the type of activity new regulation in China is seeking to keep track of.
Regulations on the Management of Blockchain Information Services
As of February 15, 2019, the new rules will be in place. They focus on increased user surveillance, forced registration of businesses, Periodic Inspections and Robust Security, and censorship use.
User Surveillance - digital companies must record and log user activity, and maintain backups of the data for at least six months to be given to authorities upon request. Identity verification will become more detailed and based on their national ID and phone number.
Registering Companies With Authorities - blockchain service providers are required to register with authorities within ten days of providing the service. ‘Blockchain Information Service Management System’ facilitates the registration, and any additions or changes to services provided must be re-registered within five day sof implementation. Companies will be provided with a number that they are required to publicly display.
Periodic Inspections and Robust Security - the central government will conduct periodic inspections. Blockchain companies are required to maintain correspondence via the new blockchain service portal. This is in place primarily to account for security breaches that have resulted in stolen cryptocurrencies.
Censorship - Blockchain service providers are required to be equipped systems that will block to content and other information that is unintended for the public according to the laws in China.
By: BGN Editorial Staff