A new policy from the Chinese government now requires blockchain-based services to censor content and to allow the country’s law enforcement to access its data and the identity of their users. The new rule will effectively rid blockchain of its anonymity feature.
A Reuters reports stated that the censorship branch of the Chinese government has approved of a policy that will require blockchain companies to register the identities of their users. According to Sixth Tone, an internet watchdog, the Cyberspace Administration of China (CAC) tasked with censoring online content has passed the Regulation for Managing Blockchain Information Services.
Starting from February 15, 2019, the regulation will be applied to all companies in the country branded as a “blockchain information service provider.” As for newly established companies, they will have ten working days to register with the Cyberspace Administration, providing their names, service types, and server addresses.
What has caused a stir in the blockchain ecosystem is the policy clause that necessitates individuals who use blockchain services to provide their identities to the government. The Reuter report suggests that the said individual will need to provide their national identity card number or phone number to avoid fines.
China Choking the Industry
While the news has received an overwhelmingly negative response, the Cyberspace Administration stays firm on their decision. According to CAC, the policy is introduced to promote a “healthy development” of the blockchain industry in China. A spokesperson from stated in an announcement.
“The development of blockchain technology has brought great opportunities to the country’s economy and society. But meanwhile, it’s also used by criminals to store and disseminate illegal information,”
The CAC asks the blockchain companies to flag and censor all content it deemed “a threat to national security.” The Sixth Tone further reveals that Companies or users who are found to “produce, duplicate, publish, and disseminate” information that is banned under Chinese law will serve a suspension of the service along with a hefty fine of $3,000 to $4,400. The Chinese government reportedly plans to asses each case individually and prosecute accordingly.
China has already been on a crackdown against cryptocurrency. Back in 2017, the country exercised a cryptocurrency trading ban and a ban on initial coin offerings. However, until now China has been quite co-operative towards blockchain technology, which seems to be changing with this policy.