Blockchain may be hot but beware if you are using it to provide services in China!
On 19 October 2018, the Cyberspace Administration of China (CAC) released a draft regulation concerning blockchain information service for public consultation. The consultation will end on 2 November 2018.
The draft regulation is promulgated pursuant to, among other laws, the Regulation on the Administration of Internet Information Service and the Cyber Security Law, and outlines several proposed new rules that would apply to any China-based companies and entities which would be regarded as a "blockchain information service provider" under the proposed regulation.
A quick snapshot of the new draft regulation is set out below:
The draft regulation is aimed at "blockchain information service provider". In the draft regulation, blockchain information service providers are defined to mean "entities or nodes" that provide information services to the public, including both institutions and individuals, using blockchain technology through websites and apps.
The CAC does not draw a clear line as to exactly what type of blockchain entities would be bound by its definition, but the general industry understanding is that the regulation will also affect supernodes of particular blockchain networks.
A number of obligations are imposed on the blockchain information service providers by the draft regulation, including:
The proposed regulations also set out in detail the various sanctions which the public authorities can impose in the event any supervision or inspection reveals any non-compliance.
Although regulations aimed at regulating the blockchain industry are still under development, this proposed regulation demonstrates China's continued attempt to regulate the internet by law. Most of the requirements however are already embedded in existing laws and regulations and should not present a surprise to businesses interested in using blockchain to provide information services in China.