China Regulators: “New Engine of Digital Economy is Blockchain, not Mining.”

On April 9, senior officials of the Chinese central government and state-owned companies held a “2019 Blockchain Technology and Data Governance Summit Forum” in Bejing.

In recent time, there has been always a lot of blockchain/ crypto-related conferences and events in mainland China, but comparing to others, this conference was a bit different.

One of the administrative departments of the Chinese central government, Ministry of Industry and Information Technology hosted the meeting and lead the discussion about the blockchain and digital economy of China.

Lee Ying, who is one of the directors of the executive committee of the Ministry of Industry and Information Technology(MIIT), participated in the forum and mentioned 4 highlights that Chinese government and MIIT will focus regarding blockchain and the industry in the future;

1. Continue to R&D on the trends of blockchain technology and the industry itself.

2. Strengthen the technological ability to support the core technology of the blockchain.

3. Create an official baseline for the blockchain industry.

4. Continue to promote the blockchain technology to utilize innovative applications in industrial internet platforms.

After the event, the conclusion was made that the most crucial point that we need to focus on is;

In recognition of the trends and technological power of the blockchain, China government will spend their energy into the R&D area in order to secure the technological power and to build the standard system for Blockchain.
Also, in order to prevent the “illegal” fundraising from Chinese government’s perspective such as ICO, STO or IEO, related local departments and associations are going to impose a certain control, even though it has no legal power or enforcement.

Many people have doubts, Does the Chinese government execute those regulations and conduct the R&D for blockchain industry or it is all just say?

Graphic by Amy Kang

According to the renowned blockchain data provider Blockdata, about 263 blockchain related projects came from China, and they accounted for about 25% of the global distribution. Surprisingly, China is overwhelmingly leading the way.

Left)Blockchain patent ranking for 2018, RIght) Blockchain patent ranking for 2019 Q1

On April 12, China’s State Intellectual Property Office reported that the number of blockchain patents in China reached up to 4351 and about 2041 of patents were registered in the first quarter of 2019. Among them, Alibaba is still in the first place following last year, and it has more than twice as many patents than it did at the end of 2018 (Alibaba had 90 blockchain patents secured in 2018). In addition, major companies in China such as major insurance company, Pingan, and the IT giant of China, Tencent were all in the top 10 list.

The Chinese government already knows that the core of the digital economy and finance will be the blockchain and DLT so that local governments have been “cleaning up” its blockchain industry and ecosystem under the guidance of Central government. It was fast and quiet.

Graphic by Amy Kang

In general, most targets who are subject to administrative removal were mining companies that would not seem to be very helpful to the government scheme and waste a lot of country resources like electricity.

Bitmain, who was the first generation mining company in China and the leader of blockchain and crypto, has faced a big financial issue and officially announced that it replaced its CEO with Haichao Wang and that its IPO filing has expired. They have been ready for the IPO in Hong Kong for a year but because of the strict regulation of China mainland and low demand for mining equipment, their dream to be the first IPO company in blockchain and crypto industry has just been dismissed.

Not long after, the Chinese central government announced on April 8 that the China National Development and Reform Commission issued the “Industrial Restructuring Guideline List 2019”, and put the crypto mining company in the “wasteful and hazardous activities slated for elimination”.

put the crypto mining company in the “wasteful and hazardous activities slated for elimination”:

The most dominant mining company in blockchain and crypto industry in the world has come to a halt, and enterprise blockchain projects led by the government are growing very fast under their protection.

On March 30, according to the National Internet Information Agency, a total of 197 blockchain information service companies and their registration numbers were announced for the first time under the “Block Chain Information Service Management Regulations”, which has been in progress since February 15.

CAC’s announcement about the Block Chain Information Service Management Regulations:

In the list, we can easily see big players in the industry such as Ant Financial of Alibaba and VeChain, Tencent, Wanxiang Group and Baidu.

According to this announcement, companies and projects on this list will be subject to regulatory oversight and also noting that it is not meaning of the permission or authorization of the company’s products or services.

China ‘s central government is increasingly trying to grab the blockchain industry in their own hands through the way of controlling with their governmental power.

Through the central bank and government agencies, they tend to organize a “chaotic” blockchain industry and ecosystem, with the government endorsing and trying to build up the industry mainly with global enterprises in the mainland. In addition, they are tending to prohibit all of the behaviors related to crypto and digital assets that they have no control over.

We always are curious about one thing: “When will the Chinese government recognize Crypto and authorize the exchange?”

Nobody knows. My current opinion is that there is no way to forecast the government’s regulation, and it is possible if we find the niche that the government can not track, but this is also not sustainable.

The first quarter of 2019 has already been gone.

What kind of attitude would China have in the second and third quarters?

China Regulators: “New Engine of Digital Economy is Blockchain, not Mining.” was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: