Blockchain startups to face new regulations in China

Blockchain startups to face new regulations in China

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The Internet censorship agency of China, the Cyberspace Administration of China (CAC), has released the draft of a framework it intends on introducing to regulate the blockchain industry in the company. The draft, “The Regulation for Managing Blockchain Information Services,” was published last Friday in order to give the public the opportunity to provide comments before the regulations are officially implemented.

If the framework is accepted as it is written, would apply to any entity in the country that is considered to be a blockchain information services provider. It would also be the first time that rules overseeing the industry have been introduced.

Per the CAC, a blockchain information service provider is defined as an “entity” or “node” that provides information services to either the private or public sector using blockchain technology.

The draft set of rules spans 23 articles. One would require that any blockchain service provider register with the CAC within 10days of launching services. Another states that the providers must register their names, industry fields, server addresses and service types with the agency. The information would be made available to the public and the CAC would investigate the companies annually to ensure that nothing has changed.

The exact types of blockchain companies that could be affected by the rules was not identified. However, some blockchain experts in the country have indicated that the proposals would most likely have an impact on “supernodes” of specific blockchain networks.

Mining pool BTC.TOP’s fonder, Jiang Zhuo’er, posted on Weibo, “For example, each of the 21 supernodes of the EOS network is operated by a company or an individual. As such, they must be fully compliant [with this regulation].”

Other sectors could be held to the new rules, as well. The draft proposal indicates that highly regulated fields—education, news reporting and publishing, pharmaceuticals—would be required to obtain licenses from authorities before registering with the CAC.

In addition, service providers could not use the blockchain to “produce, duplicate, publish, and disseminate” information prohibited by current laws. All service providers would also be obligated to adhere to Know-Your-Customer (KYC) guidelines, including the collection and reporting of national identification numbers and/or cell phone numbers. “Service providers must store the logs and content published by users of their blockchain services for six months and provide this information to law enforcement when required,” details the new policy.

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