Blockchain Comparative Guide – – China

1 Legal and enforcement framework

1.1 What general regulatory regimes and issues should
blockchain developers consider when building the governance
framework for the operation of blockchain/distributed ledger
technology protocols?

In China, blockchain developers should consider the following
regulatory regimes and issues:

Cryptocurrencies Regulation.
Cryptocurrencies are strictly prohibited in China. Specifically,
Blockchain-related applications in cryptocurrency mining, trading,
and ICOs are all declared illegal in China. Therefore, it is almost
impossible for blockchain developers to issue blockchain-related
tokens with monetary value or other securitized products in China.
Blockchain developers should be alerted and guard against any
monetary tokenization of their applications which could be regarded
as illegal financial activities by the regulatory bodies.

Internet Information Services Regulations.
Providers of information services to the public through the
Internet, Apps and other forms using blockchain technology will be
subject to the regulatory mechanism on the Internet information
service. Specifically, blockchain information service providers
shall ensure the security of information content, equip themselves
with technical measures appropriate to their services, conduct real
identity authentication, formulate and publish their management
rules and platform conventions, etc. As a generally applied
administrative obligation, they also need to file the services
provided with the competent authorities for records.

In addition, when building a governance framework, blockchain
developers should also consider the data protection and privacy
regulations, the intellectual property regulations, the anti-money
laundering (AML) and know-your-customer (KYC) regulations, tax
regulations, consumer protection regulations, environmental,
social, and governance (ESG) goals and requirements, etc. to ensure
compliance and user protection.

1.2 How do the foregoing considerations differ for public and
private blockchains?

In the current practice in China, private chains are used more
frequently than public chains, in both the public and private
sectors, because private chains are subject to autonomous, or
centralized, management in terms of business operation and risk
control by the operators. Because the Chinese law imposes the same
obligations upon businesses run on the pubic blockchains and the
private blockchains, although developing and launching a private
blockchain may be more costly, it is more efficient, less resource
intensive and has simpler consensus algorithms, to operate than the
public chains, which means cheaper, in terms of compliance risk
management.

1.3 What general regulatory issues should users of a blockchain
application consider when using a particular blockchain/distributed
ledger protocol?

Using a blockchain or a distributed ledger protocol is not risk
free. Users should firstly determine whether the blockchain service
they are using is a lawful blockchain service. For example, if the
blockchain service is a service that creates, exchanges or support
use of cryptocurrencies, it is illegal service and use of such a
service is not protected by the Chinese law.

If the blockchain service is a lawful service, users should then
understand whether any law imposes any legal obligation upon them
when they use the blockchain service. For example, if the users are
using a blockchain service to share information to the public, the
users should understand that they should not share contents
prohibited by the law through such a service.

Finally, the users should ascertain their rights and obligations
under the contracts with the blockchain service provider so that
they can better protect their own interests, such as personal
information, in using the service.

1.4 Which administrative bodies are responsible for enforcing
the applicable laws and regulations? What powers do they have?

In China, there is no special regulation on the blockchain as a
technology yet, but some services using blockchain or other
technology are regulated. Examples of such services include
telecommunication, eCommerce, content monitoring, cryptocurrencies
and financial services, and etc. The regulators of the above
services include the Ministry of Industry and Informatization
(MIIT), the Cyberspace Administration of China (CAC) and the
People’s Bank of China (PBC), the State Administration for
Market Regulation (SAMR), and the police.

MIIT

The MIIT oversees the telecommunication and information
technology industry in China and is the regulator of blockchain
technology development. It is also responsible for industry
regulation and has released several industrial policies supporting
combining the blockchain technology with other services. It is also
responsible for formulating technical standards for blockchain
technology and its applications.

CAC

The CAC focuses on the supervision of content services and data
businesses that leverage the blockchain technology. It is
responsible for record-filing and regulating information service
providers which use blockchain technology. It also has the general
responsibilities to protect data in a broad sense (including
personal information), conduct cybersecurity review, data
cross-border transfer security assessment and the China Standard
Contract filing.

PBC

As China’s central bank, the PBC has been very active in
maintaining financial stability and controlling the financial risks
associated with cryptocurrencies. Since 2017, the PBC (alone and
jointly with other regulators) has issued several announcements and
notices determining blockchain application associated with
cryptocurrencies being illegal.

1.5 What is the regulators’ general approach to
blockchain?

The regulators’ general approach to blockchain is that they
ban any attempt to connect the technology directly and indirectly
with cryptocurrencies, it is cautious about the application of the
technology in content services, but it welcomes the application of
the technology in other industrial areas.

China has launched various initiatives aimed at promoting the
use of blockchain and DLT in industrial and commercial application.
The central and local governments released thousands of policies
and documents that encourage integration of blockchain technology
development and implement business application of this technology
in various industrial sectors.

However, the regulators keep a close watch on the blockchain
application in the financial and content services industries. The
PBC has concerns about the financial risks arising from blockchain
and financial derivatives based on blockchain technologies, and has
issued a series of announcements and risk warnings in past years.
The CAC, through record-filing and security assessment, conducts
its regular supervision on those blockchain-technology-backed
content services. As of mid-March 2023, more than 3,000
blockchain-technology-backed information services have been filed,
but some filed services have been found to be involved in virtual
currency mining or other reasons and have been cancelled, according
to the official news from the CAC.

1.6 Are any industry or trade associations influential in the
blockchain space?

Among various blockchain trade associations and self-regulatory
organizations in China, the China National Blockchain and
Distributed Ledger Standardization Technical Committee and the
Blockchain Technology Application Working Committee of the Internet
Society of China are better known.

The former is an unincorporated technical organization
established under the guidance of the MIIT to carry out
standardization work in the field of blockchain and DLT and is
composed of officials from national and local government sectors,
professors from universities and research institutes, and leaders
of well-known technology companies. The latter is a secondary
working committee under the Internet Society of China, established
at the end of 2020, whose members come from well-known Chinese
technology companies, telecommunication companies or research
institutes. According to public information, it is mainly
responsible for conducting research on blockchain technology
applications, organising a series of salon activities on blockchain
technology applications, building a knowledge system on blockchain
technology applications, organising member units to develop
blockchain-related group standards and carrying out work related to
technical training and talent training on blockchain.

2 Blockchain market

2.1 Which blockchain applications and protocols have become
most embedded in your jurisdiction?

Because most of the blockchains in China are private chains and
consortium chains, Ethereum protocols and Hyperledger fabric seems
more popular.

2.2 What potential new applications/protocols are most actively
being explored?

Please refer to our response to Question 2.3 below.

2.3 Which industries within your jurisdiction are making
material investments within the blockchain space?

Distributed Ledger Technology (DLT) has been applied to a
variety of sectors and has become a fast-growing engine in China
over the last few years, especially in financial services
(including traditional banking, online banking and electronic
payments processing), public sectors or government administration,
judicial evidence collection, energy, and supply chain management.
China further builds a Blockchain-based Service Network (BSN) as
China’s Web 3.0 infrastructure to develop an international
blockchain network without adoption of any cryptocurrency.

Different from the rest of the world, China government has been
actively promoting blockchain technology and invest heavily in
research and development of blockchain technology.

Financial service is the sector that adopts the use of DLT the
earliest in China and is also the sector where the use of DLT has
been most widely explored. Almost all large banks and Fintech
companies in China have been actively deploying DLT in the fields
of supply chain financing, trade financing, fund management, and
transaction processing. For example, in trade financing area, the
PBC, the central bank of the PRC, initiated a joint effort with
listed companies to build a blockchain platform for trade
financing, aiming to use the transparent and immutable properties
of blockchain to promote the development of a trade financing
supervision system.

Blockchain-enabled internet of things (IoT) solutions for
tracking and managing data are widely used in sectors such as smart
cities, agriculture, and logistics.

In public sector, the Chinese government has heavily invested in
and encouraged the development of private or consortium blockchain
applications and services in areas such as judiciary and
administrative management. One of the most mature applications is
the judicial blockchain. Judicial blockchain systems used by the
courts of Beijing, Hangzhou, Guangzhou and other cities are
providing support for digital evidence storage, authentication, the
automation of contract execution and the smart court management
system.

2.4 Are any initiatives or governmental programmes in place to
incentivise blockchain development in your jurisdiction?

Blockchain is highly regarded as a promising technology in
China, and its development attracts special attention and is
particularly encouraged by the Chinese government. This started
with a reference in a CPC Central Committee Political Bureau
conference in 2019, emphasising that blockchain, as a core
technology, should be seen as an important breakthrough for
self-innovation.

In the 14th Five-Year (2021–2025) Plan published in March
2021, the Chinese government sees blockchain as one of the
promising emerging digital industries and envisions that consortium
blockchain should be adopted as the infrastructure to develop
application solutions for the blockchain service platform, Fintech,
supply chain financing, administrative governance and services. As
follow-up to the 14th Five-Year Plan, the Ministry of Education
released the Blockchain Technology Innovation Action Plan of
Higher Education Institutions (Action Plan), and the MIIT,
together with the CAC, jointly released the Guiding Opinion to
Accelerate and Promote the Technical Application and Industry
Development of Blockchain (Guiding Opinion). The Supreme Court
issued the Opinion on Strengthening the Judicial Application of
Blockchain (Opinion). The Action Plan, the Guiding Opinion and
the Opinion will serve as the foundational documents that will
influence the development of blockchain technology and its
application in the next five years.

In addition to the above key central government policies, as of
September 2022, around thirty China’s local governments have
included the development of blockchain technology in their 14th
Five-Year Plan, and a total of 319 industrial policies related to
blockchain have been issued, covering various industries or fields
such as public data sharing, finance, supply chain and logistics,
healthcare, agriculture, etc., according to a latest report
published by a research institution affiliated with the MIIT.

3 Cryptocurrencies

3.1 How are cryptocurrencies and/or virtual currencies defined
and regulated in your jurisdiction?

Cryptocurrencies and/or virtual currencies are generally viewed
with suspicion by the Chinese government, which has taken a firm
and assertive stance against their use and circulation. In 2013,
the PBC issued a statement characterising for the first time that
bitcoin is not a currency and is therefore not recognized as a
legal tender in China. This effectively means that bitcoin and
other cryptocurrencies are not legally protected currencies in
China. On May 18, 2021, three official associations jointly issued
a notice reaffirming that virtual currency, as “a specially
designated virtual commodity”, does not possess the same legal
status of a statutory currency.

However, the administrative prohibition seems not depriving the
property value of the virtual currencies as a type of virtual
asset. In judiciary practice, courts hold diverse opinions on
complex issues arising from cryptocurrencies-related practices, and
the nature of virtual currencies is fraught with controversy. In
civil cases, claims in relation to unjust enrichment of virtual
currencies may be upheld (See
(2018)川1181民初488号;
(2018)京02民终7176号); despite decisions to
the contrary (See (2018)鲁01民终4976号),
there are still courts that have held that contracts for the sale
and purchase of virtual currencies, as well as contracts for the
sale and purchase of mining machines used to produce virtual
currencies, are valid and legally binding (See
(2020)京民终747号;
(2021)沪01民终11624号). In criminal cases,
convictions of illegal theft of virtual currency are premised on
the recognition of the property nature of virtual currency.

3.2 What anti-money laundering provisions apply to
cryptocurrencies?

As for anti-money laundry related approach against
cryptocurrencies, before the ban, all branches of the PBC shall
include financial institutions, payment institutions, and internet
sites that provide bitcoin related services like bitcoin
registration under anti-money laundering supervision. Such
institutions shall immediately report suspicious transactions
related to bitcoin and other virtual currencies to the China
Anti-Money Laundering Monitoring and Analysis Center and cooperate
with the anti-money laundering investigation activities of PBC.
Since the cryptocurrencies are now banned in China, cryptocurrency
transactions are illegal transactions, and there is no need to
further analyze whether there is any anti-money laundry
concern.

3.3 What consumer protection provisions apply to
cryptocurrencies?

The Chinese government has taken a strict stance on
cryptocurrencies to protect consumers from financial risks and
fraud. On September 15, 2021, the PBC, CAC, and another eight
authorities jointly released the Circular on Further Preventing
and Disposing of Risks in Virtual Currency Trading and
Speculation. The Circular further emphasizes that investment
by any legal person, unincorporated organization and natural person
who invests in virtual currencies and related derivatives should be
null and void, and the losses arising therefrom should be borne by
those investors. If the investment is suspected of disrupting
financial order and endangering financial security, the party
concerned should be investigated and punished by relevant
authorities according to the law.

The above provision is a clear signal that, as the crackdown on
virtual currency trading deepens, investors or consumers of virtual
currencies are on their own for investments and losses arising from
their investments. They will not be protected by Chinese laws and
regulations regarding consumer protection or financial consumer
protection.

3.4 How are cryptocurrencies treated from a tax
perspective?

Referring to our response to Question 3.2, given that there is
no room left in China for cryptocurrencies, China’s tax regime
does not intentionally consider the tax items and rates related to
the issuance and circulation of cryptocurrencies, nor does China
have any specific tax laws and regulations with regard to
cryptocurrencies.

In September 2021, the national tax authorities ordered to stop
all tax support for virtual currency “mining” projects
and no longer allow local governments to grant tax support for such
projects, and those that have been granted tax incentives need to
be cancelled by a deadline.

3.5 What regulatory requirements apply to a cryptocurrency
trader/exchange?

The PBC prohibits blockchain from being used in any way relating
to virtual currency trading. The prohibition on the use or trading
of cryptocurrencies in China is rigorous. Specifically, virtual
currency-related business activities are illegal financial
activities. Carrying out exchange services between legal currencies
and virtual currencies or between virtual currencies, buying and
selling virtual currencies as a central counterparty, providing
information intermediary and pricing services for virtual currency
transactions, token issuance financing, virtual currency derivative
transactions and other virtual currency-related business activities
are suspected of illegal sale of tokens, unauthorized public
issuance of securities, illegal operation of futures business,
illegal fundraising and other illegal financial activities, which
shall be strictly prohibited and banned in accordance with the
law.

Provision of services by an overseas virtual currency exchange
to a Chinese residents via the Internet is also illegal. Investment
transactions involving virtual currencies are subject to scrutiny,
and public interest risks and legal risks should both be
considered.

3.6 How are initial coin offerings and securities token
offerings defined and regulated in your jurisdiction?

China’s financial supervisory authority, PBC, has banned ICO
since 2017 and has been strengthening its supervision against
cryptocurrencies continuously.

In accordance with the Announcement on Preventing Initial
Coin Offering (ICO) Risks released in 2017, ICO related
activities, especially for selling of virtual currencies such as
bitcoins and Ethereum to investors are prohibited.

In 2021, the authorities further their regulatory action by
posing even stricter bans on cryptocurrencies. In April 2021, China
Internet Finance Association, together with two industry
associations, issue the Announcement on Guarding against the
Speculative Risks of Virtual Currency Trading (Announcement).
The Announcement stated that, illegal sale of tokens, unauthorized
public issuance of securities, illegal operation of futures
business, illegal fundraising and other illegal financial
activities shall be strictly prohibited.

On September 15, 2021, PBC, together with nine government
agencies, further issued the Circular on Further Preventing and
Disposing of Risks in Virtual Currency Trading and
Speculation, prohibiting virtual currencies such as bitcoin,
Ethereum, and USDT circulating in the market as currencies. The
Circular clearly determines the services that are provided by an
overseas virtual currency exchange as illegal financial
activities.

4 Smart contracts

4.1 Can a smart contract satisfy the legal requirements of a
legal contract under the laws of your jurisdiction? What will be
considered when making this determination?

The mainstream view about the smart contract is that it is
likely as an automated process to verify the terms of or supplement
to a traditional contract in the legal sense, but it cannot serve
as the replacement of the traditional contract.

Many scholars think that smart contract does not satisfy the
legal requirement of a legal contract, because it prevents
contracting parties reach a consensus after fully negotiation, as
the smart contract is a pre-programed automated process. However,
some people have the opposite opinion. A draft national standard
entitled Information Technology – Blockchain and Distributed
Ledger Technology – Smart contract implementation
specification provides in its Article 3.1 that smart contract
can represent a legal contract term and impose enforceable
obligations in application jurisdictions.

However, whether a smart contract can be considered a contract
in the legal sense is still an open question. The traditional legal
definition of a contract places more emphasis on an
“agreement” of the human being, but smart contracts are
driven by computing automation. It is appropriate to consider smart
contracts as an automated process to verify the terms of a
contract, but it seems too early for China to equate it with a
legally recognizable contract.

4.2 Are there any regulatory or governmental guidelines or
policies within your jurisdiction which provide guidance on
regulating/defining smart contracts?

There is no official definition for smart contracts under the
Chinese legal framework. In essence, a blockchain smart contract is
a piece of code written on a blockchain. It is technically
understood that a smart contract is a computer protocol that
disseminates, validates or executes a contract, which is embodied
in the blockchain as an automated computer program. Such a concept
is confirmed in the recommended national standards Information
security technology – Security specification for information
service of Blockchain (draft for comments) and Information
technology – Blockchain and distributed ledger technology
– Smart contract implementation specification (draft for
comments).

4.3 What parts of traditional contract might smart contracts be
able to replace?

Under the current Chinese legal regime, traditional contracts
might be replaced by smart contracts in the following parts in the
future:

• Performance. Smart contract can monitor the performance of
  obligations during the whole course of contract performance. For
  example, in IoT devices that are embedded with sensors, if the
  devices are detected with error, the smart contract can
  automatically stop the operation or impose penalties according to
  the agreements between contracting parties.




• Proof retention and dispute resolution: Smart contracts can
  provide a transparent and immutable record of contract terms and
  actions, which can help reduce the costs and uncertainties of
  traditional litigation or arbitration.

The Chinese court system is keen on the application of
blockchain and smart contracts. The Supreme Court promulgated the
Provisions on Several Issues Concerning the Trial of Cases by
Internet Courts, which came into effect since 7 September
2018. According to this document, blockchain and other similar
technologies can be used to authenticate evidence in legal disputes
in China.

It’s important to note that currently the smart contract is
unable to replace traditional contract in all respects under the
current laws. Currently, smart contract is used in very limited
scenarios in China, mostly in judicial adjudication practices by
the judges and other persons handling the case.

4.4 What parts of traditional contracts might smart contracts
be unable to replace?

Under the current law of the PRC, smart contracts can not
replace any part of the traditional contract, as smart contracts
are deemed from legal perspective as more of a verification or
authentication process than a legal document. See details in our
response to the question above.

4.5 What issues might present themselves in your jurisdiction
with regard to judicial enforcement of smart contracts?

There has been no judicial enforcement cases of any smart
contracts in China. Therefore, it is premature to discuss the
issues in smart contracts enforcement.

4.6 What are some practical considerations that parties should
consider when drafting a smart contract?

Since the smart contract is deemed more of an evidence
verification or authentication process in China, preferably such a
process should be conducted on the judiciary blockchain which is a
private blockchain built by the Supreme Court and the Internet
Courts of the PRC. If the process is conducted on a third party
private or consortium chain, the process will be subject to the
judicial examination by the court pursuant to the rules regarding
the electronic evidence authentication which is a complicated
process to go through.

4.7 How will the foregoing considerations differ when smart
contracts are running on a private versus public blockchain?

There is no public blockchain in China, so there is no such a
question.

5 Data and privacy

5.1 What specific challenges or concerns does blockchain
present from a data protection/privacy perspective?

The followings are some challenges for blockchain under the
current legal regime:

• Difficulty in responding to the personal information
  subject’s request to amend, delete, and erase their personal
  information. Immutability is one of the most prominent features of
  blockchain technology, which is in conflict with the above
  individuals’ rights under PIPL;




• Difficulty to comply with the minimum and necessity principle
  in processing personal information. Blockchain technology is known
  with its completeness and permanency to store information in all
  circumstances. However, when personal information is recorded in
  the ledger, it will encounter challenge from the personal
  information protection laws because processing personal information
  is subject to a time limit corresponding to the processing purpose,
  but deletion of the personal information from the ledger is not
  possible.

5.2 What potential advantages can blockchain offer in the data
protection/privacy context?

Notwithstanding the above challenges, the potential advantage
blockchain can offer in the data protection/privacy context may
include the following:

• Data security. Advanced encryption algorithms that are used in
  blockchain may help with the security of personal information
  stored in the distribute ledgers.




• Data integrity. Data is stored on a distributed network of
  nodes. Such a design can help ensure the quality of the data
  processed in the blockchain.




• Data transparency. Theoretically, personal information
  processing on blockchain is visible by all participants on the
  chains. This is more transparent in a centralized processing which
  is only visible by a small group of people with the processor.




• Processing consistency. On blockchain, smart contract is a new
  possibility which can ensure that processing by different
  participants of the same data following the same terms and
  conditions defined in the smart contract.

6 Cybersecurity

6.1 What specific challenges or concerns does blockchain
present from a cybersecurity perspective?

The challenges or concerns about blockchain in terms of
cybersecurity are mainly on the security measures:

Blockchain is not immune to security attacks. In fact,
blockchain can be vulnerable to network attacks if the attacker
gains control of sufficient computing power in the network, and, as
a result, the attacker can then manipulate transactions on the
network.

To prevent such a situation, consistent security measures need
to be deployed and upgraded from time to time for the whole
blockchain network. Decentralized structure creates security
governance challenges. Operation in such a structure has compliance
concern. The Cyber Security Law of the PRC provides networks that
are operating in China should be properly managed by the operator
of the network, and the operator should take the full
responsibility for operating the network. Such obligation is hard
to fulfil in blockchain operation.

6.2 What potential advantages can blockchain offer in the
cybersecurity context?

The cybersecurity advantage of blockchain from legal perspective
is its diversity. The public chain, the consortium chain and the
private chain can be put together to deploy different security
strategies to meet different legal requirement.

6.3 What tools and measures could be implemented to mitigate
cybersecurity risk?

From legal perspective, mapping the security requirements and
leveraging the use of consortium chain and private chain may be
good approach to meet the security obligations.

7 Intellectual property

7.1 What specific challenges or concerns does blockchain
present from an IP perspective?

Blockchain presents a few challenges from an IP perspective in
China, which are similar to many other countries:

• Blockchain may be used illegally to misjudge the originality of
  the work. Blockchain can be applied to prove a piece of work is
  new. But, if some people steal works from the author, and upload to
  a blockchain platform, the platform is unable to properly verify
  whether those works are created by the platform user.




• Privacy and data protection: Blockchain technology, especially
  those relying on public chains, may not be suitable for certain
  types of IP assets that require strict privacy and data protection.
  There is a risk that sensitive information may possibly be exposed
  on a public blockchain.

7.2 What type of IP protection can blockchain developers
obtain?

• Patents: Blockchain developers can obtain patents for new and
  innovative blockchain technologies, such as consensus mechanisms,
  smart contract systems, and tokenization methods. Patents can
  provide strong protection for these innovations and can help
  developers prevent others from using their inventions without
  permission.




• Copyrights: Blockchain developers can obtain copyrights for the
  code and software that they develop. Copyrights can provide
  protection against copying or unauthorized use of the code.




• Trademarks: Blockchain developers can obtain trademarks for
  their company name, logo, and other branding elements. Trademarks
  can help protect the developer’s brand identity and prevent
  others from using similar names or logos.




• Trade secrets: Blockchain developers can protect their
  innovations through trade secret laws. This includes keeping their
  technology secret and taking steps to prevent others from
  reverse-engineering or copying their innovations.

7.3 What are the best open-source platforms that could be used
to protect developers’ innovations?

In China, there are many open-source platforms that can be used
by developers to protect their source codes and innovations,
including but not limited to:

• OPENATIM FOUNDATION




• Mulan opensource.




• OSCHINA

All of them offer services to protect developers’ innovation
in strict confidence, but now it’s hard to elect the best
platforms among them.

7.4 What potential advantages can blockchain offer in the IP
context?

Blockchain technology, due to its immutable feature,
transparency and decentralization structure, can be applied to
protect IP in China, particularly in the consortium chains or the
private chains. For example, IP owners can store their IP assets on
the blockchain services to keep a tamper-proof and immutable record
that cannot be altered. Blockchain can also make the transaction of
IP products cheaper, because the blockchain platform is able to
provide a fast, and secure environment to transact IP products
automatically and securely. Consortium chain platforms accepted by
the court can simplify the evidence authentication in IP
disputes.

8 Trends and predictions

8.1 How do you think the regulatory landscape in your
jurisdiction will evolve in the blockchain space over the next two
years? Are any pending changes currently being considered?

The regulatory landscape on blockchain technology is on the
businesses adopting the technology, not on the technology itself.
In the next two years, it is foreseeable that the national
standards and administrative policies on the technology itself will
emerge and guidance and encouragement to the technology will deep
dive to the specific business scenarios rather than on the concept
development as it is happening right now.

8.2 What regulatory changes would you like your jurisdiction to
implement to further advance the blockchain industry?

The current regulatory strategy focuses on blockchain is on
don’ts, such as prohibition of the cryptocurrencies, ICOs,
other illegal fundraising, pyramid schemes, frauds and illegal
contents. We would like to see that regulatory policies could
provide more dos to identify the space for innovation.

The current regulatory strategy encourages on consortium chains
and private chains and disfavour the public chain. Given the fact
that the rest of the world are developing more applications and
innovations on the public chain, to promote better alignment and
alliance in technology exchange, we would like the future
regulatory strategy allows the pubic chains in designated
areas.

We would look forward to seeing more administrative policies and
guidance defining the specific applications and their
operators’ rights and responsibilities, including the IP
protection, smart contract’s legal status under the law, and
solutions to solve the conflicts between personal information
protection and blockchain technology.

8.3 What is the largest impediment within your jurisdiction to
the adoption of blockchain technology?

As a technology with the feature of decentralization, if the
regulatory authorities could provide more clear guidance on safe
space for innovation and business use cases, it would give more
confidence to the people in the fields to be more creative and
passionate to adopt the technology.

9 Tips and traps

9.1 What are your top tips for effective use of blockchain
technologies in your jurisdiction and what potential sticking
points would you highlight?

The top tip to effective use of the technology in China is that
the development of the technology and the use cases should focus on
the consortium chains and private chains. The design the business
and operation model of the consortium chains and private chains
should consider the existing regulation of the use cases.

As to the sticking points, businesses attempting to adopt the
technology in a specific business case should seek regulatory
compliance advice in well advance after the business model design
matures but before any substantial development stars to ensure the
design and operation of the business model complies with the
existing regulatory requirements for the businesses. In addition,
after the adoption of the blockchain backed businesses, the
operator should continue watching the regulatory changes and
evaluate whether any timely technical or operational changes is
necessary for continued compliance with the law.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.