China Announces New Regulations For Blockchain Companies

The Cyberspace Administration of China issued an announcement yesterday, saying that the “Regulations on the Management of Blockchain Information Services” had been approved by the Chamber of Commerce and will be implemented February 15, 2019.

The provision is based on three considerations, including the need to further promote the security management of network information, the need to promote the healthy development of blockchain messaging services, and the need to prevent security risks in blockchain messaging services. The new regulations are aimed at safeguarding national security and social public interests and protecting the legitimate rights and interests of citizens, legal persons, and other organizations.

The blockchain message service (hereinafter referred to as the service) referred to in the regulations is a messaging service provided to the public through the Internet, applications, etc. based on blockchain technology or systems. As for the service provider, it is the main body or node that provides the information service to the public, and the organization or organization that provides technical support to the subject; and the user includes the organization or individual who uses the service.

As a service provider, within 10 working days from the date of providing the service, the file management system of the website should be used to fill in the name, service category, service form, application area, server address, and other information. The provider is also required to authenticate the user’s organization code, identity card number, or mobile number as required. Users who are not authenticated may not be provided with related services.

Another key point is to implement the responsibility for message content security management and establish and improve management systems such as user registration, data review, emergency response, and security protection. Providers or users may not use services to engage in activities prohibited by laws and administrative regulations that endanger national security, disrupt social order, violate the legitimate rights and interests of others, and may not use services to produce, copy, publish, or disseminate information content prohibited by laws or administrative regulations.

If the service provider violates the above regulations, the authorities will be given a warning, ordered to correct within a time limit, and the relevant business would be suspended before the correction; if the refusal is not corrected or the circumstances are serious, businesses would be subject to a fine of 5,000 yuan to 30,000 yuan (~$75 to $450).

The Chinese government has banned ICOs and exchanges and has gradually expanded its control over the blockchain industry. In August last year, the WeChat public number of 8 blockchain media was permanently suspended. By October, the Office of the Internet had begun drafting documents and seeking public comments. Members of the public could submit their views through the Legal Information Network e-mail until the 2nd of November. Since then, it is said that the new measures are officially announced.