On Friday the Cyberspace Administration of China published draft regulations which impose censorship on blockchains. Unlike mainstream public blockchains, all blockchains that operate within China will not allow anonymous users. Users will be required to register using their national identity cards.
The stated aims of the regulations are to :
- regulate blockchain information service activities
- safeguard national security and public interests
- protect the legitimate rights and interests of citizens, legal persons, and other organizations
- and promote blockchain
According to the South China Morning Post, an example of why the government wants such legislation was the recent public posting of an allegation on Ethereum. The anonymous person attached a letter alleging the cover-up of sexual harassment at a top university more than 20 years ago. Given blockchain’s immutability, that letter cannot be removed.
China banned ICOs and trading in cryptocurrencies as did some other jurisdictions. These new rules will reign in public blockchains that don’t involve a coin. For example, when setting up a blockchain platform, the organization has to complete a government form that outlines details of the applications and all the server addresses. If applications change, they have to inform the government. Plus there will be annual audits.
Also, the rules impose existing censorship laws on any blockchain operator. A blockchain service provider has to “eliminate illegal information in time to prevent Information dissemination, keeping relevant records and report to relevant authorities”.
The draft rules cover any content that might “disrupt social order”.
Many of the rules stipulate sensible things like using the relevant technology and appropriate disclosures to users.
Separate new regulations give authorities inspection power over companies that provide internet services.
The combination of both sets of rules raises questions: What will be the impact on node hosting of international business blockchains? If Chinese companies sell their technologies outside of China would these rules still apply?