China Sets Its Direction With New Draft Rules for DLT

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China Sets Its Direction With New Draft Rules for DLT

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The Cyberspace Administration of China (CAC), the central government’s internet censor, is drafting a policy framework which, once formulated will be used for regulating blockchain projects in the country.

The CAC’s draft called “The Regulation for Managing Blockchain Information Services” will be thrown open to the public for feedback who will have until Nov 2 to give it the thumbs up before it moves to the next level of state approval by the country’s regulators.

The new regulation, when established, will apply specifically to both individual and institutional providers of blockchain services, whether by laptop or mobile, referring to providers as “entities or nodes”

The draft currently contains 23 proposals, including one which determines that any public offerings by a provider must be registered with the CAC within 10 days including details like company name, service type, and server address. Experts in China suggest that supernodes of certain blockchain networks could be affected. Jiang Zhuo’er, founder of the BTC.TOP mining pool commented on the proposed regulations:

“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.”

The new regulations would have a broad range, also incorporating news reporting, publishing, education, and pharmaceutical services, which would all be required to obtain licenses before registering with the CAC. Unsurprisingly the draft stipulates that DLT cannot be used to disseminate content deemed prohibited by the Chinese authorities. The #Metoo movement had managed to bypass government controls via DLT, a fact clearly not lost on officials when drafting the new rules.

Protection for user security and against fraud is another feature of the 23 proposals, with the CAC proposing KYC measures that would gather national identification numbers or mobile phone numbers of clients, stating:

“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,” the draft policy proposed.

The Blockchain Technology and Industry Development Forum (CBD Forum) of CESI want to draft three new blockchain standards by the end of 2018, with a possible release in 2019. CBD Forum has been largely responsible for drawing up guidelines for blockchain development in China, having so far published “China Blockchain Technology and Application Development White Paper (2016)” and “Reference Architecture of Blockchain” standards under instruction from MIIT (Ministry of Industry and Information Technology).

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