China Enforce Regulation On Blockchain Industry

The Cyberspace Administration of China, the internet regulators of the country, have announced that they will start to enforce regulation on blockchain companies and startups in the country from February this year.

The CAC has announced that they will enforce regulation on the blockchain industry in the country and those regulatory measures will be implemented as soon as 19th of February, which at this point is five weeks away.

Regulations and the new rules that are going to be enforced on the blockchain industry were first announced by the CAC in a long, detailed document that they released not too long ago.

This document that frames guidelines for the blockchain industry has been read and approved by the Office of the Internet Information Office of the State Council. After reading the document, the Office of the Internet Information Office of the State Council have given the Cyberspace Administration of China its go ahead.

Talking to media in the country, the director of the Cyberspace Administration of China said the following;

“The Regulations on the Management of Blockchain Information Services has been reviewed and approved by the Office of the Internet Information Office of the State Council and is hereby promulgated and will be implemented as of February 15, 2019.”

In the past, China has not been so forthcoming about cryptocurrency regulation. In fact, it conducted a massive crackdown on the ICO sector in the beginning of 2017 which was later followed by a decree from the Chinese central bank pulling back support for the cryptocurrency market.

Good News?

The cryptocurrency market and the community has been under the scanner in China for quite sometime now. Following the massive crackdown on the ICO sector and thereby the entire cryptocurrency sector, many companies and startups moved to the neighbouring Hong Kong in search of better and kinder regulation.

But with this news, it is clear that blockchain companies will now be encouraged in the mainland. However, this may not be what the community was expecting. All blockchain companies have been asked to submit to a voluntary audit, followed by a complete list of their user base. The companies are also being asked to verify and authenticate all users based on their IDs and nationalities.

Another important point is that all blockchain companies, startups and service providers are expected to register with the authorities within ten days of providing/commencing a service. The entire registration process will take about 20 days after which the authorities will come back with a filing number and other identification tags for the same. Companies and startups are also subject to periodic inspections, checks and audits conducted by the Chinese governing bodies.

The guidelines that are being laid down by the government contradict the very foundation of the cryptocurrency market. Because submitting to audits, giving up their user base, etc is a blatant form of centralisation. And this is definitely not what the global cryptocurrency community wants, however for the Chinese community it is a huge victory.

The regulations are going to be enforced as of the 19th of February. And from there onwards, China is turning a new page on its relationship with the cryptocurrency market. Only time will tell how effective these new guidelines are going to be.