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Beijing to Enforce New Blockchain Laws to Monitor Internet Content

Beijing to Enforce New Blockchain Laws to Monitor Internet Content

Cyberspace Administration of China (CAC), the state body for internet censorship, has announced new guidelines for controlling the blockchain space in the country. The plan for tighter control over blockchain service providers was introduced in October of last year.

Beijing’s Blockchain Information Service Management Regulations will take effect from 15 February, showing how urgently the government wants to curb content which it feels might be detrimental to the state.

The new regulation has singled out blockchain providers, despite published comments over the past year coming from Beijing that blockchain has huge potential to streamline business. These regulations state that providers cannot “produce, duplicate, publish, [or] disseminate” banned content under state law.

More specifically, the new rules have defined blockchain providers as “entities or nodes” providing public information through desktop or mobile sites. Any companies providing these services will need to register with the CAC within ten days providing their names, server addresses, service types, and server addresses. No compliance with the CAC will face fines between USD 737 to USD 4,420.

The new regulations have a broad range, also incorporating news reporting, publishing, education, and pharmaceutical services, which would all be required to obtain licenses before registering with the CAC.

China has strict internet laws and the space is highly monitored by the state. It is thought that the tightening of control by the CAC is a response to those who have used blockchain tech in the past in order to circumvent Beijing’s control over the country’s internet content.

The most recent violation of China’s strict internet laws occurred in July 2018 when pharmaceutical company Changsheng Biotechnology was put in the spotlight online by bloggers who listed the firm’s transgressions on the Ethereum blockchain.

 

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China Warns Fintech Revolution Potentially At Risk Without Rules

China Warns Fintech Revolution Potentially At Risk Without Rules

The president of a major financial investment platform has suggested that the sheer numbers of fintech companies setting up in China represents a risk to the country’s development as a major hub because of lack of controls.

Vince Zhang, President of Phoenix Finance, was speaking on Day 3 of CNBC’s East Tech West on 29 November 2018 in Guangzhou. He suggested that many of the country’s fintech firms could be unsound due to lack of strict operating checks and balances, making them unsuitable in the long term for consumers. It is estimated that there are now tens of thousands of such companies operating in mainland China.

Zhang went on to say that this factor means that China’s fintech revolution is potentially at “a very big risk” due to this lack of competent management. He stated:

“A lot of companies are not [there] in terms of their business plan, in terms of their risk management process, in terms of their overall management… A lot of these corporate control mechanisms are not in place.”

Zang maintains that China’s so named “fintech revolution” has caused the numbers of fintech firms to swell over the past two years in a surge to attract unbanked consumers. He said that although other sectors may survive, he sees the financial sector in danger of coming under increased pressure: “For anything related to financial services, [it] is pretty dangerous.”

Phoenix Finance’s president suggests that better regulation is key to solving this potential problem and feels that the issue will get the attention from government regulators next year as the risks to China’s fintech developmental plans for the future become more evident. He argued that regulation will reduce the number of companies currently operating financial services:

“Without proper risk control mechanism personnel, without proper ways of communicating with regulation, it’s potentially becoming a very big risk going forward… I would predict in 2019 it’s becoming more regulated… There will be less and less players in this field.”

The Cyberspace Administration of China (CAC), the central government’s internet censor, is drafting a policy framework which, once formulated will be used for regulating blockchain projects in the country.

The new regulation, when established, will apply specifically to both individual and institutional providers of blockchain services, whether by laptop or mobile, referring to providers as “entities or nodes”.

 

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