China continues to sculpt its domestic blockchain industry, both on a regulatory and a development level. The country has been seen as a leading hub of blockchain innovation among private entities, but the ability of its government to support innovation is helping to drive those initiatives. In the latest examples of how China is embracing blockchains, it has seen two major updates that are going to prove to be catalysts for further development of the technology, as well as for the possible launch of a central bank digital currency.
As of January 1, China has a new Password Law that is reportedly helping serve as one of the core tenants of the country’s eventual digital currency rollout. The law had been approved in October and was implemented at the beginning of the new year, and establishes legal definitions of different types of passwords, according to the China Money Network. They are now put into one of three categories—core passwords, common passwords and commercial passwords.
Core and common passwords are going to be heavily regulated, while the government will work with the commercial sector to help it develop the commercial password realm. By implementing a legal framework for passwords, China is creating protection surrounding the private keys in order to help protect data and offer legal recourse in the event the rules are broken.
In December, the country saw the introduction of new financial vehicles that has even greater implications for the blockchain space. An application has been submitted to the Shenzhen Stock Exchange (SZSE) for a Penghua SZSE Blockchain 50 Trading Open Index Securities Investment Fund. If it is approved, the fund will be the first blockchain trading investment fund in China.
The SZSE also launched the Shenzhen Stock Exchange Blockchain 50 Index on December 24. According to China Securities Network, the Index uses “companies in the Shenzhen Stock Exchange’s listed companies whose business areas involve the upstream and downstream of the blockchain industry as a sample space, including hardware equipment, technology and services, and blockchain applications.” Among these are Ping An Bank, Midea Group, Zixin Pharmaceutical, Guangdian Express, SF Holdings, Suning Tesco and others.
The fund is more than likely going to be a catalyst for the launch of similar products in the future, which will help the blockchain industry grow even more. According to one analyst, Everbright Prudential Fund Manager Dong Weiwei, “From a longer-term perspective, more bull stocks will appear on the technology track in the future. We will select some technology companies with outstanding industry status and strong technical strength as the core configuration.”
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