China Internet Censorship Authorities Publish Regulations for Blockchain Startups

October 25, 2018

October 19 the Cyberspace Administration of China (CAC) released “The Regulation for Managing Blockchain Information Services”.

If the draft publicly accepted, its provisions will be applied to all blockchain service providers across the country and become the first ones adopted by the Chinese authorities to regulate blockchain industry.

According to the regulation blockchain service providers are nodes that execute public information services for individuals or institutions via websites or mobile apps based on distributed ledger.

The paper says that providers have to pass mandatory service registration by the CAC within 10 days after they started operations. Under this registration blockchain startups have to provide their name, service type, branch of activity and server addresses. The CAC will hold annual inspections with startup data being publicly available.

Local crypto experts agree that these rules are meant to affect primarily supernodes of blockchain nets.

“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,” Jiang Zhuo'er, the head of BTC.TOP mining pool, told.

The regulation also notes that providers of services with specific state supervision like news publication, education and pharmaceutical industry will have to get corresponding license before registering at the CAC.

In addition the registered providers will not be allowed to use blockchain services to create, publish and distribute content non-compliant with China law.

It must be mentioned that the blockchain technology allowed Chinese users for skirting state internet censorship known as “The Great Firewall”. For instance, amid #Metoo public movement activities and local pharmaceutical scandal recently people started using websites based on Ethereum to voice their opinions.

The document also says that new regulations force blockchain services to register their users via KYC (Know Your Customer) method that gathers their phone numbers or national IDs:

“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 regulation will stay open for discussions till November 2. After that the CAC will either adopt it or continue making amendments according to reviews and public feedback.

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