Internet censorship in China: regulations on the blockchain

The China Internet Censorship Agency has released a draft regulation that provides the regulation of blockchain-related service providers in the country.

The Chinese Cyberspace Administration (CAC), the government’s Internet censor, published a draft policy on Friday entitled “Regulation on the management of information blockchain services” and is seeking public reviews before the rules can enter into force.

Regulation, if adopted, will be applied to any object that is considered as a supplier of information services for the supply chain operating in China, and will be one of the first rules specifically designed to manage the blockchain industry in the country.

CAC defines that information service providers associated with the blockchain are “entities or nodes” that provide public information services using blockchain technology.

Under the new policy, there are only 23 articles and CAC requires that blockchain service providers register with the agency within 10 days after it began offering products to the general public.

The proposed projects that run the blockchain must register their names, types of services, activity specifics and server addresses in the CAC. This information becomes publicly available after registration, and CAC will conduct reviews on an annual basis, updating its policies.

While CAC does not provide clear information on what types of blockchain startups fall under the definition of a supervisory authority, some industry experts in China said that this regulation may affect the super-codes of certain cryptocurrency networks.

Jiang Zhuoer, the founder of the mining pool BTC.TOP, published in his Weibo:

“Each of the 21 super networks of the EOS is managed by a company or an individual. Therefore, they must be fully compatible with this provision.”

In addition, blockchain service providers for the supply chain in some highly regulated areas of the country (news, publications, education, and pharmaceuticals) must also receive licenses from the relevant authorities before they register with CAC.

Service providers, in accordance with the proposed rules, are not allowed to use the blockchain technology for “producing, duplicating, publishing and distributing information or content that are prohibited by Chinese laws”.

In addition, the proposed project requires information service providers using the blockchain to enforce Know Your Customer (KYC) measures by collecting national user identification numbers or their mobile phone numbers. The draft policy proposes:

“Service providers must keep records and content published by users of their services for six months and provide this information to law enforcement authorities when necessary.”

At present, public comments are expected until November 2, after which the draft policy will proceed to the next step.