Beijing imposes draconian regulation on domestic blockchain networks

November 20, 2018

Regarding the new laws imposed by the Chinese government, users are required to register national ID-card details so that the state can get access to all blockchains and censor anything considered a “threat”.

Users of blockchain-based information services must provide their personal information according to the latest updates on regulations, announced by the Cyberspace Administration of China. The purpose of such legislation is to prevent the built-in anonymity from the technology, censor content as well as to inspect users’ data.

The latest restraint on this inchoate technology results from Beijing’s suspicion falling on bitcoin and other cryptocurrencies. All Chinese citizens must report their real names and national identification details in order to be able to use blockchain services, reported by a local media site.

Additionally, enterprises which offer services applying decentralized technology are required to censor information considered to be “threats” to national security and to allow authorities to review and inspect users data, the new rule proposes. However, there is opposing opinion from industry critics that such laws would contradict the intrinsic value of blockchain including preservation and protection of privately encrypted data.

It is not news that the mechanism shows their abolition of blockchain-based services. In April, a Chinese student made great efforts to apply Ethereum blockchain in publishing an open letter on the alleged cover-up of sexual harassment at a top university. In light of this, this method was selected as social media censored it on Wechat and Weibo, initially blocking the content.

Not long after the publication of the information via Ethereum, Xiao Xieyi – ‘Mini Protocol’ in English, a new blockchain app was launched on WeChat,  China’s billion-plus-users social network platform. Nevertheless, the service was suspended.

It is undeniable that public blockchain, freedom, and privacy of blockchain users are impeded in China. In the recent years, there has been an increasing number of blockchain startups leaving the country to seek possible development opportunities resulting from Beijing’s prohibition on digital currency trading and initial coin offerings.

It is not the first time that China has implemented oppressive internet regulations. Legislation requiring real identification for registering for social media is now applicable in China. A sweeping cyber-security law which gives the powerful State Administration of Press, Publication, Radio, Film and Television access-all-areas rights, came into force in 2017 and has been vastly criticized for privacy violation. Earlier this month, there became another set of legislations that permit the government the ability to enter the premises and inspect data of enterprises providing internet services

The three academics Ben Kaiser, Mireya Jurado and Alex Ledger have examined how China’s “Great Firewall” internet censorship regime could be exerting “strong influence” over the proliferation of Bitcoin. At this time, to what extent the impact of this regulation can cause, is uncertain. However, it is undeniable that Beijing intends to control its own blockchain networks.


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