As of February 15, 2019, the Cyberspace Administration of China (CAC) is implementing additional regulations and guidelines aimed at Chinese blockchain companies. These regulations hope to ensure that the blockchain industry in China is held to a higher standard, thereby providing a stronger development of companies within the blockchain industry by eliminating the ability of users to be anonymous.
Some experts theorize that the regulations were enacted due to an anonymous letter published on a blockchain platform. This letter alleged sexual harassment claims against a professor at a Chinese university. While authorities were able to delete the letter from Chinese social media platforms, they were unable to censor the allegations within blockchain platforms. These anti-anonymity regulations are in addition to several current and expected regulations of the blockchain industry to protect investors and reduce financial risk. Although, China does not recognize cryptocurrencies as legal tender and the banking system is not accepting cryptocurrencies or providing related services, it has generally been supportive of blockchain.
China and the Blockchain
Chinese firms took 57 spots in a newly compiled Top-100 Blockchain Enterprise Patent Rankings list, according to IPRDaily, a global intellectual property information media outlet. China filed the most blockchain patents with the World Intellectual Property Organization (WIPO) in 2017, according to Thomson Reuter’s statistics. China accounted for 49% of filed patents -- the U.S. was a distant second with 33% of filed blockchain-related patents.
Chinese companies are leading the world in blockchain innovation. MATRIX AI Network, a global open-source, public, intelligent blockchain-based distributed computing platform and operating system building AI-enabled autonomous and self-optimizing blockchain networks, featuring multi-chain collaboration and decoupling of data and control blocks to improve transaction speed and expand the universe of smart contracts.
MATRIX AI Network recently confirmed system throughput speeds exceeding 50,000 transactions per second (TPS), faster than Bitcoin, Ethereum, and even Visa (NYSE:V), proving blockchain technology can support the most demanding commercial applications. Other domestic companies with promising blockchain technology including NEO, a blockchain platform and cryptocurrency designed to build a scalable network of decentralized applications and QTUM, a blockchain technology that bridges Ethereum's smart contracts on top of Bitcoin's stable blockchain while using proof of stake for verification.
Who Must Adhere to the Anti-Anonymity Regulations?
Blockchain companies that must abide by the regulations are those defined as websites or mobile applications utilizing blockchain technology to present information or tech support to the general public. Within 20 days from when the regulations go into effect, each blockchain firm must register their company's name, domain, and server address with the CAC.
What Will the Regulations Do?
Once companies register their necessary information with the CAC, authorities will be able to access their data. A registry process would also be enabled, obligating users to provide ID cards or mobile numbers. Additionally, these regulations will ensure that the blockchain companies review and censor content to safeguard against sharing information that is otherwise prohibited in China.
Failure to Comply
If a blockchain company fails to register its name, domain, and server address with the CAC before the 20-day grace period is completed, the company could face fines ranging from 20,000 to 30,000 Yuan ($2,900 to $4,400 in American dollars). Criminal charges could apply to blockchain companies that refuse to comply with the regulations.