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Internet Watchdog of China, CAC Issues Draft Regulations for Blockchain-Based Information Services

On Oct. 19, new draft regulations for blockchain-based information service providers are published by China’s top-level internet watchdog, the Cyberspace Administration of China.

The aforementioned draft is open for public consultation until Nov. 2. The draft proposes twenty three articles meant for the regulation of all entities providing blockchain-based information services to the Chinese public. Under the suggested rules, all the related entities and stakeholders would be required to register with the CAC within ten days of launching their platforms.

As per the new regulations, the service providers are bound to censor content that is deemed to cause a threat to national security or to disrupt the existing social order and to allow authorities to scrutinize user data stored on their respective systems.

It is to be noted that one article would make it mandatory for service providers to ask users to register using their real names, national ID card numbers, and phone numbers, in order to alleviate the discerned risks of a pseudonymous blockchain-based system that operates without a centralized entity’s oversight.

The identity requirement allegedly comes in the wake of a high-profile incident in April, as per the reports of local media the South China Morning Post. In this incident, a Chinese activist is said to have published an “open letter” onto the Ethereum (ETH) public blockchain regarding the alleged cover-up of sexual harassment at a prestigious local university.

The controversial choice of the activist to attach the letter onto a publicly-visible transaction on Ethereum reportedly came after internet censors had attempted to restrict the post’s circulation on the popular Chinese social media platforms Weibo and WeChat.

South China Morning Post further cites the perspective of a Beijing-based lawyer, Xu Kai on the draft rules. Xu has allegedly highlighted the fact that the document does not address the immutable nature of data on blockchain-based systems. He also shed light on the fact that this immutability is in conflict with Chinese laws on user data. Xu allegedly further states that the rules do not outline enforcement procedures for protecting the rights of blockchain platforms.

It is to be noted that WeChat permanently blocked a number of cryptocurrency and blockchain related accounts that were suspected of publishing Initial Coin Offering (ICO) and crypto-related puffery, as per the reports on August 21. This is in violation of new regulations that had been introduced by the Cyberspace Administration of China, earlier this summer. The content diminution was introduced as part of a broad sweep of tightened anti-crypto measures, both online and offline.

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