China Blockchain Policy Research Report March 2019

Reported by BitBlock

Background: The global circulation of cryptocurrencies makes China’s cryptocurrency market closely related to the global market. Therefore, the big environment formed by the blockchain policies of all countries in the world has also become the global background for the introduction of China’s blockchain policy. On the whole, China’s attitude towards the blockchain is in line with global policy trends, that is, it has a negative attitude towards cryptocurrency but strongly supports blockchain technology. Specifically, the main features are as follows:

The state’s supervison of the blockchain is mainly reflected in the regulation of cryptocurrency represented by Bitcoin and ICO. The development of Chinese policies is a dynamic process. On the one hand, due to the global circulation characteristics of cryptocurrency, Chinese cryptocurrency development has different characteristics at different stages under the influence of the world. At the same time, the development of cryptocurrency represented by bitcoin and its underlying technology blockchain is still in its infancy, and the government and the public are also in the process of changing old and new cognition. On the whole, as of the end of 2018, the Chinese regulatory policy had gone through three stages of development.

(1) The bitcoin skyrocketing triggered the government’s attention, the government began to recognize risks and strengthen prevention (2013-2014)

In the second half of 2013, bitcoin prices rose rapidly, setting off a first wave of cryptocurrency investment in China. BTCChina, OKCoin and Huobi.com have developed rapidly, and some well-known companies including Baidu and Suning have revealed their intention to accept bitcoin payments. However, the sharp rise of bitcoin prices in 2013 caused potential finances risks began to surface, which has attracted the attention of senior financial regulators.

In this context, in order to remind investors to guard against risks and maintain financial stability, on December 5, 2013, the People’s Bank of China, the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission jointly issued the <Notice on preventing Bitcoin risk>. <Notice> believes that Bitcoin is not a currency, but a specific virtual commodity; Bitcoin transactions are commodity trading on the Internet, the ordinary people have the freedom to participate at their own risk; and explicitly prohibit financial and the payment institution participates in bitcoin transactions, provides customers with bitcoin-related services.

(2) The government began to study cryptocurrency and blockchain technology, the supervision was relaxed (2015-2016)
After receiving the collapse of the world’s largest bitcoin exchange Mt.Gox and the <Notice>, the Chinese bitcoin market entered a recession, but the bitcoin price has gradually stabilized and the blockchain technology start to enter more people’s horizons. In 2015-2016, the supervision of cryptocurrencies was mainly rely on the influence of <Notice>2013, which constituted the main regulatory framework for cryptocurrency in China. The central bank has focused more on exploring the possibility of issuing digital currencies.

(3) Advocating the currency-free blockchain, explicitly prohibiting ICO (2017-2018)

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In early 2017, the central bank conducted a comprehensive review of the exchange, and the network of supervision was officially rolled out.
On January 6, 2017, the central bank issued a notice saying that it has contacted the relevant regulatory authorities to ensure compliance with the operation and supervision of the main trading platform, and to conduct corresponding “cleanups” when necessary. On January 11, the central bank conducted a spot check on the leading exchanges BTCChina, OKcoin and Huobi.

In the second half of 2017, the war of ICO regulatory started
Since 2016, with the popularity of the blockchain concept, blockchain-based entrepreneurial projects have begun to receive attention in China, and there is a platform for providing services for ICO in China. In the first half of 2017, there was a climax of ICO in China. However, the ICO projects are mixed, and many projects are suspected of fraud and illegal fund-raising, and there are huge financial risks. The regulatory war against 1CO officially launched with the notice of 1CO risk issued by China Internet finance association.

In 2018, continuous follow-up supervision on emerging ICO and cryptocurrency trading methods
After the announcement of the “94”, the Chinese ICO behavior and “cryptocurrency” trading venues were basically eliminated, but some institutions turned the project overseas, and cryptocurrency trading takes place off-exchange, and a variety of new underground transactions were derived. Due to the uncertainty of overseas policies, financial risks are still very high. In January 2018, the China Internet Finance Association issued the <Notice on preventing the risk of overseas ICO and “cryptocurrency” transactions >, warning investors should guard against overseas ICO institutions that having system security risk due to lack of norms , and investors should actively strengthen risk awareness.

Some exchanges and ICO projects that have turned overseas are still affecting Chinese investors through social media, information platforms, and over-the-counter transactions. In August 2018, the relevant departments launched a second round of regulatory actions. In August 2018, the China Insurance Regulatory Commission, the Central Network Information Office, the Ministry of Public Security, the People’s Bank of China, and the General Administration of Market Supervision issued the <Notice on Preventing the Risk of Illegal Fund Raising in the Name of “Cryptocurrency” and “Blockchain”>, giving risk warnings for illegal fundraising, pyramid schemes and fraud activities of the concept of speculation blockchain.

Actions under heavy supervision:
(1) Order the virtual currency trading platform to withdraw. As of May 2018, 110 trading platform websites have been blocked.


(2) Continue to strengthen the rectification from the payment settlement side. The regulatory authorities have repeatedly talked with payment agencies such as Tenpay and Alipay. Tencent and Alipay have made a down payment limit for the virtual currency trading account. Alipay currently checks and closes about 3,000 accounts engaged in virtual currency transactions.


(3) Supervising other virtual currency promotion channels. Beijing’s promulgation policy prohibits the promotion of ICO project promotion activities in hotels and other places, and more than 30 blockchain media accounts have been suspended.

This report contains data comes from third-party sources. It is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

Note: Since the beginning of last year, the regulation of the cryptocurrency has been tightened. The content of the WeChat public account of “ICO”, which is related to “coins” and “ICO”, has been shut down. The Chinese ICO project promotion activities in China should try to avoid directly referring to these sensitive words. , which can be replaced with alternative words.

I. Overview of China’s Blockchain Policy

1.1 Many local governments actively introduce policies to seize the commanding heights of blockchain development
The local government has actively promoted the blockchain track in order to upgrade the industry with new opportunities brought by blockchain technology, and promoted the development and application of the industry. According to incomplete statistics, as of Dec 2018, 29 provinces including Beijing, Shanghai, Chongqing, Jiangsu, Zhejiang, and Guizhou have issued 161 relevant policy documents related to blockchain. The difference lies in the degree of the introduction of talents, the construction of carriers, emphasis on preferential subsidies, technological innovation, application pilots, and financing support, mainly related to the local industrial base and development appeals.I

1.2 Blockchain industry’s decision-making design and supporting policies are relatively lacking

Although most of China’s provinces (autonomous regions) have issued blockchain-related policy documents, but due to the different regions have different industrial bases and policy openness and exploration. only 11 provinces including Shanghai, Chongqing, Guangdong, Hunan, Hainan, Jiangsu, Guizhou, Hebei and Shandong have issued direct policies.. From a national perspective, the direct policies related to the development of the blockchain industry are relatively insufficient.

1.3 International standards are intensifying and promoting the development blockchain

The blockchain industry development policy system has become more and more shaped, and the government encourages the development and application of blockchain technology. The regulation of cryptocurrency and ICO has curbed the barbaric growth of the blockchain, making the technical value of the blockchain more prominent. The state’s support policies for blockchain are mainly reflected in the following three aspects:

(1) Write the blockchain as a strategic frontier technology and write it into the development plan.
(2) Take the lead in promoting the unification of blockchain technical standards.
(3) Promote blockchain technology to empower the real economy and present a trend of expanding from the financial sector to other sectors.
The areas that enable the real economy include education, the Internet, manufacturing, e-commerce, big data, logistics, cloud computing, artificial intelligence, justice, and postal services.

1.4 Self-discipline supervision of industry associations, supplementing government policies

At present, there are some central-level industry associations, such as the “China Blockchain Ecology Alliance” established by the China Electronic Information Industry Development Research Institute under the Ministry of Industry and Information Technology. Many provinces and cities have also established local associations. The role of the association is to supplement government supervision and implement policies. Most associations

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Adopt measures such as setting up technical research institutes and setting up industrial funds. Taking the Guangzhou City Block Chain Industry Association as an example, the association aggregates relevant resources, and cooperates with the Guangzhou Huangpu District Block Chain Training Institute to cultivate relevant talents. The association guides related enterprises to settle in Guangzhou, and introduces capital to establish a blockchain private equity venture capital special fund. The total investment exceeds 40 million.

II. Analysis of Local Blockchain Policy

2.1 Industrial Park has become an important carrier for the development of local blockchain industrial clusters

(1) A total of 161 blockchain-related support policies were issued in 29 provinces.
Since 2016, cities such as Beijing, Guangzhou, Shanghai, and Shenzhen have successively introduced relevant policies to encourage and support the development of blockchain. As of December 2018, out of the 34 provincial-level administrative regions in China, 29 provinces have issued 161 blockchain-related support policies. Among them, Guangdong Province is the most, followed by Zhejiang Province and Guizhou Province. And most of them are concentrated in 2017 and 2018.

(2) Supporting policies are mainly divided into three categories, and planning policies account for 70%.

  1. i  Write the blockchain into development planning, promote blockchain technology research and empower other industries
  2. ii  Funding, taxation, etc. for blockchain companies and projects
  3. iii  Layout industry parks and other blockchain infrastructure / establishment of blockchain alliances, associations and other institutions or organizations

Among the blockchain-related policies issued by all local governments, the planning category has the highest proportion, up to 70%, and is concentrated in the planning of other industries, such as artificial intelligence, big data, supply chain, finance, industrial Internet. This shows that the government departments regard the technical attributes of the blockchain as the focus of policy formulation, and regard the blockchain as a new generation of Internet technology, it has the same status as artificial intelligence, big data, and cloud computing.

(3) Establishing 16 blockchain industrial parks in 9 provinces with supporting policies
The blockchain industrial park is an important carrier for the development of blockchain industrial clusters, and local governments are accelerating construction. As of December 2018, there are about 16 cities in China that have established or will soon establish blockchain industrial parks (government-led), including Shanghai, Zhejiang, Guangdong, Chongqing, Shandong, Jiangsu, Hunan, Hebei, Jiangxi.

2.2 Blockchain support policies in different regions are tailored to local conditions, reflecting their future development priorities

This report contains data comes from third-party sources. It is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

Beijing, Shanghai, Shenzhen and Hangzhou are still the four cities with the highest level of entrepreneurial activity in China’s blockchain. In addition, Guangzhou, Suzhou, Hainan, Xiamen, Chongqing, Guiyang and other places have also introduced relevant support policies and talents for blockchain industry.

(1) Beijing: Focus on the application of blockchain in finance
From 2016 to December 2018, Beijing has a total of 8 blockchain related policies and no special policies. Two of the policies involve the government sector, and the other six are related to the financial sector. It can be seen that Beijing’s support and application of the blockchain is still focusing on the financial sector. According to the statistics of Wuzhen Think Tank, Beijing is currently the city with the largest number of blockchain technology startups, with more than 40, accounting for more than 40% of the national total.

(2) Shanghai: Landing policy grants financial support, emphasizing the key technical status in the development of information technology

Shanghai’s support policy emphasizes the key technology status of the blockchain in the development of information technology, attaches importance to the development of blockchain-related industries, and explicitly grants funding to blockchain projects. The blockchain enterprises are subsidized 5 million, and the individual is subsidized 100,000 yuan. Shanghai Internet Finance Industry Association released the first self-regulation rule for blockchain in the Internet finance industry in China – “Internet Finance Practitioners Blockchain Technology Application Self-Regulation Rules”; besides, Shanghai Yangpu District announced the proposed “blockchain building”, the first blockchain industry cluster led by Shanghai government.

(3) Guangdong Province: the number of policy and blockchain industrial park ranks first in the country, withGuangzhou and Shenzhen the most active

There are 18 blockchain-related policies in Guangdong Province, including 6 supporting policies and 5 blockchain special policies (including park construction measures). These policies are mainly concentrated in Guangzhou and Shenzhen. There are currently three industrial parks in Guangdong Province, all located in Guangzhou. Among the policies that have been issued, the “Guangzhou Development Zone Promoting Blockchain Industry Development Measures in Guangzhou Huangpu District”, which was introduced at the end of 2017, is aimed at the cultivation, growth, application, technology, platform and finance of the blockchain industry. It is estimated that the annual fiscal input will increase by about 200 million yuan and considered to be the local blockchain policy with the strongest support and the strongest model breakthrough. In addition, the Shenzhen Financial Office also issued the “Technical Specification for the Blockchain Platform of the Financial Industry (Draft for Comment)” to standardize blockchain technology.

(4) Zhejiang Province: Hangzhou led the development of blockchain, special support policy and industrial park boost blockchain development
Among the 16 policies in Zhejiang Province, there are 4 special policies for blockchain (including industrial parks). Hangzhou has become the most active area for the development of blockchains in Zhejiang Province, with three industrial parks located here. From the perspective of the industries involved in the policy, Zhejiang Province is more focused on the layout from the financial perspective, then from future frontier technology, to develop the blockchain.

This report contains data comes from third-party sources. It is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

In addition, The Hangzhou Blockchain Industrial Park was launched, and the “Xionghai Global Blockchain Innovation Fund” was launched to support the development of blockchain enterprises and talents. The capital scale is as high as 10 billion yuan, which is the largest blockchain innovation in history fund.
Simultaneously, in the autumn of 2018, Zhejiang University set up the course of “Blockchain and Digital Currency” for some senior undergraduates and postgraduates. It is the first university in China to offer such courses. The Ant Financial Blockchain announced the launch of the new scene at a frequency of half a month: Launched the world’s first blockchain cross-border remittance in Hong Kong and the Philippines;

Launched the country’s first blockchain electronic medical bills in zhejiang province; Launched the first judicial chain in the world cooperate with hangzhou Internet court; ……

(5) Hainan Province: Established the first blockchain test area in China
In 2017, Hainan has three policies covering blockchain, mainly emphasizing the application of situational

technology in the fields of finance and logistics. Established in October 2018 in Hainan Free Trade Zone (Hong Kong) blockchain test area, it is the first blockchain test field officially awarded in China. Under this policy dividend, Hainan Eco-Software has attracted a number of high-quality head enterprises such as 360 Blockchain, Thunder Blockchain, Huobi headquarters, Baidu Chain, etc., At the same time, it has established close cooperation with domestic and foreign first-class technology, laws and regulations research institutions such as tsinghua university’s wudaokou school of finance and Oxford University’s blockchain research center.

Regardless of the early carnival and brutal growth , the practical application of blockchain technology and relevent high-level talents have always been eager to be introduced by governments around the world. Nowadays, as the regulatory policies of various parties become clearer, the blockchain has gradually returned to rationality, and international blockchain institutions are paying more and more attention to the Chinese market. However, the entry of foreign projects needs to take into account local talent reserves and regional support policies. From the current attitude of the provincial governments to the blockchain, Zhejiang’s development blockchain is well thought out. In particular, Hangzhou, relying on the scientific research strength of Zhejiang University and the financial strength of Alibaba Cloud and Ant Financial, is becoming a highland of China’s blockchain innovation, providing a reference for other regions to formulate policies.

III. Prospect of Blockchain Policy in 2019

2018 was called the first year of blockchain application by the industry. Since the announcement of “94”in 2017, the industry chain phenomenon generated by the blockchain industry around cryptocurrency has been effectively curbed. From the central government to local governments, the direction of development has shifted. The blockchain technology itself and the exploration of specific application scenarios. While some may lament the involvement of regulators in 2018, restrictions on ICO projects, and a strict compliance framework, these are signs of market maturity. It is foreseeable that in the future, the strategic development status of blockchain technology will not change, and financial fraud and speculation caused by cryptocurrencies such as Bitcoin will continue to be regulated. It is expected that the blockchain in 2019 will have the following development trends:

This report contains data comes from third-party sources. It is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

First, the practice of blockchain technology has deepened. In 2018, the blockchain began to be empowered by a large-scale entity economy. In 2019, the exploration of specific application scenarios of blockchain will continue to be the main theme of blockchain development. The most active blockchain industry applications currently exist in the financial, supply chain and trade finance industries. However, distribution and services, logistics, aviation and other industries are also beginning to explore the potential of blockchains in terms of payments, remittances, traceability and other use cases. Promising technological advances in other areas such as artificial intelligence, big data, the Internet of Things and biometrics will also increasingly integrate with blockchain technology. The convergence/combination between the blockchain and the Internet of Things (IoT) has begun to play a role. According to the International Data Corporation (IDC) report, many IoT companies will incorporate blockchain technology into their products. IDC predicts that by 2019, 20% of IoT services will install blockchain services. In addition, using a blockchain security framework and automating data exchange, the combination of artificial intelligence (AI) and blockchain will also drive the entire industry. For example, autonomous driving, the current autonomous driving technology has become more and more mature with the innovation of artificial intelligence and Internet of Things technology, which can effectively guarantee the data security of the unmanned transportation system. The financial regulatory authorities have also cooperated with companies such as BAT to collect data using technologies such as blockchain.

The regulatory logic of the blockchain industry has changed. From 2013 to 2018, the state implemented supervision and support policies for the blockchain. At present, the activities and activities of illegal fund-raising in the name of “cryptocurrency” and “blockchain” have been included in the scope of supervision and
crackdown by the five ministries and commissions. It will become a supplementary force for the development of the blockchain industry, and the state will guide the industry to develop in a positive and positive field, especially in the direction of the empowerment of the real economy. On January 10, 2019, the National Internet Information Office issued the Regulations on the Management of Blockchain Information Services, which will take effect on February 15, 2019. The Regulations elaborate on the definition of blockchain information services, the provider and user behavior criteria of blockchain information services, regulatory authorities, regulatory requirements and legal responsibilities, and promote the healthy development of blockchain technology and related services.

With the popularity of the blockchain concept, blockchain technology is not an area that relies on concepts to attract attention and investment, but a technology that requires practical application and enrichment of application scenarios. With the development of the industry and the disappearance of the bubble, it is likely that the country will attract more high-quality blockchain projects. For the innovators, how to truly realize the blockchain empowerment of the real economy is the biggest test in 2019.

Reported by BitBlock

This report contains data comes from third-party sources. It is not intended to, and does not, constitute an offer or solicitation to buy and sell securities or engage in any investment activity. This report is for informational purposes only. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

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