China’s internet regulatory body, the Cyberspace Administration of China (CAC), is set to implement new regulations for blockchain companies operating within Chinese borders. The CAC shared the announcement through the release of a detailed document that outlines the final draft of the new regulations.
Blockchain rules to be implemented next month
According to the document, the rules will come into effect on February 19 and are meant to provide strict guidelines for companies to adhere to. The CAC director stated that the regulations “have been reviewed and approved” by the State Council’s Internet Information Office and are not ready for implementation.
The Internet Information Office has been tasked with monitoring and enforcing blockchain regulations at the national level, while state and province authorities will be responsible for implementing the regulations in their respective states.
The regulations will bring a lot of changes to the way that blockchain companies operate in China. Companies will be required to record and log user activities and have to maintain backups for a minimum of six months. The recorded data must be made available to the authorities upon request. Companies are additionally required to verify their users through national identification numbers as well as phone numbers.
Blockchain service providers in China are expected to register with the relevant authorities. This should be done within ten days of providing the service. Authorities have set up a ‘Blockchain Information Service Management System’ in order to ensure that the registration process goes smoothly. Companies who wish to change the services they provide will have repeat the registration process within five days.
Chinese authorities will review the filed application and enter the company into official record. This will be done within twenty days, and companies will be required to display their record number on their website as well as other public platforms.
New companies will be tasked with aligning their safety assessments with all relevant regulations when developing new products. Blockchain companies are further required to equip themselves with the ability to issue warnings to users, as well as restrict and close their accounts. The regulations require companies to report all users who violate administrative laws to the relevant authorities.
The document stipulates that users shouldn’t use blockchain services to carry out illegal activities. This rule also applies to blockchain companies, blockchain information service providers and users. To ensure that services are provided efficiently, companies will have to establish a robust system to help manage complaints and address challenges.
Inspection and security checks will be conducted
Blockchain companies will not be allowed to operate without supervision. Authorities will carry out periodic inspections and security checks. A blockchain service portal has been made available, and companies have been asked to utilize the system as the main avenue for correspondence with authorities whenever information is requested.
Companies are also required to implement the highest security standards in order to avoid the loss of funds via hacking.
Breaching the stipulated rules will lead to suspension
Any company that violates the regulations will be required to make changes to their offering. The services offered by the company will be suspended until the issue is resolved. For some offenses, companies may incur fines ranging from 5,000 CNY to 30,000 CNY, and could potentially face criminal prosecution.