China launches Blockchain Initiative despite a blanket crypto ban

Recently, the Cyberspace Administration of China (“CAC”) disclosed its plan
to launch an internal effort to boost blockchain advancement and innovation in 15
regions and 164 organizations of China.
CAC oversees China’s cyberspace security and internet content control. Its
major functions include directing and supervising internet content management,
and operating administrative approval of business online news reporting.
It is interesting to note that last year in September 2021, Chinese government
announced a complete ban on crypto trading and mining operations. However, this
new blockchain initiative plans to introduce blockchain technology in all companies
and government institutes all over the nation.
Recently, CAC and 15 other government bodies including National Energy
Administration, Ministry of Industry and Information, the Central Bank Of China, and
the China Securities Regulatory Commission issued a collective statement through
notice. These government bodies announced their plan to introduce Chinese
economy with blockchain technology infrastructure with an extensive data
exchange support structure that will further encourage the development of a multiparty collaborative blockchain industry eco-park.
The notice also focused on the need for regulatory departments to emphasize
on advancement and boosting the pilot projects and to fully develop blockchain in
enhancing data sharing, fully optimizing business operations, reduction in operating
costs, and forming a reliable system.
The Cyberspace Administration of China announced thorough its official
WeChat account that they have decided to start extensive trials in cities of China
like Beijing, Guiyang, Shanghai, Guangzhou in southern Guangdong, and Chengdu
in Sichuan province. The Chinese authority has decided to conduct their launch
project on universities and hospitals of mentioned cities.
The administration also announced the name of the companies that will be
cooperating with them for the pilot project. The introduced list by CAC comprises of
the name of big entities like Commercial Bank of China, Beijing Gas Group Co., Ltd,
SAIC-GM-Wuling Automobile Co., and China National Offshore Oil Corp. These
abovementioned bodies will conduct projects in hospitals, law, energy,
manufacturing, finance, health, risk control management, inspection, criminal trials,
cross-border finance, and various sectors of Chinese economy.
Regardless of China’s strong viewpoint against crypto adoption, the Chinese
government emphatically encourages related digital payment systems like
blockchain and nonfungible tokens (NFTs). As per the reports, the blockchainbased Service Network (BSN), is working on a foundation to support businesses
and individuals in China in building non-fungible token (NFTs) concentrated
platforms and apps.
Blockchain-based Service Network is a government-backed blockchain
project launched in April 2020 by the Chinese government, administered by State
Information Centre, a Chinese government policy-making council directly affiliated
to the National Development and Reform Commission. Blockchain-based Service
Network (BSN) projects main aim is to underpin the setup of platforms that are
capable enough of trading non-crypto NFTs through fiat currency making digital
transactions a“Digital Silk Road”.
In November 2020, He Yifan, the Executive Director of the blockchain-based
Service Network and the CEO of Red Date Technology, claimed that in 2040-2050
all information systems will adopt blockchain-based channelling technology.
Likewise, in an interview with DigiChina, Yaya Fanusie, an Adjunct Senior
Fellow at the Centre for a New American Security (CNAS) predicted that
blockchain-based Service Network is going to be a long-term project of more than
10 years.
On the blanket ban on cryptocurrency, He Yifan cleared people’s doubt in a
statement on South China Morning Post saying NFTs have no legal issue in China
considering they do not engage in cryptocurrencies like bitcoin. He Yifan said
generally NFTs are used for digital art only, but certificate management is going to
be the biggest market due to its revolutionary database technology, license plates
or academic diplomas can be a huge market for NFTs in the future.
China’s blockchain projects seem like a push into Non-Fungible Token (NFTs)
which is tied to the state-run Blockchain Services Network (BSN), introduced in
September 2020.
This blockchain initiative by CAC gains significance as China is planning to
take digital yuan onto the global level. As per stats released by government of
China, China’s digital yuan trial recorded payment of around $8.3 billion in the past
six months and $13.68 billion in the last two years. Interestingly, more than 260
million users were recorded by the end of 2021.
For the Chinese government having a centralized blockchain technology
structure means having a good hold over the means of information distribution of
Non-Fungible Token and probably China’s digital yuan currencies. Introducing
blockchain-based channelling technology for exploring trade finance and crossborder finance would also result in an exchange of data but it will also pay the way
for embracing digital yuan transactions globally.