Becoming the first nation to pass a crypto-law, China prepares for a new regulatory framework to implement throughout the country.
China dives deeper into the world of cryptocurrency with its recent announcement that the Standing Committee of the 13th National People’s Congress, passed a new law regulating cryptography. Taking effect January 1, 2020, the legislation will establish a central crypto agency that will set guidelines and policies for the crypto industry.
Whereas, cryptography involves creating written or generated codes that allow information to be kept secret, the regulatory framework that China will put into place sets the standards of application of their cryptography and the management of passwords.
China’s president Xi Jinping recently said. “We must take blockchain as an important breakthrough for independent innovation of core technologies, clarify the main directions, increase investment, focus on a number of key technologies, and accelerate the development of blockchain and industrial innovation.”
Some experts surmise that this new regulation is creating a firm foundation for the soon to be announced, Chinese National cryptocurrency.
“China is moving quickly to launch a similar idea in the coming months,” said Mark Zuckerberg when he testified before the House Financial Services Committee on October 25 about Facebook’s cryptocurrency called, Libra. “We can’t sit here and assume that because America is today the leader that it will always get to be the leader if we don’t innovate.”
Libra is Facebook’s attempt to rival Bitcoin, a cryptocurrency where half of it is mined in China. With half of Bitcoins hash power, or measures on how many computers are computing the cryptocurrency, industry leaders are acknowledging China’s dominance in the field. From mining hardware manufacturers like Bitmain, Canaan, and Ebang to some of the largest mining operations in the world, with Bitcoins mining being centralized we can see how China leads in public cryptographic work.
“To understand any Chinese legislation and regulatory update, you need to know the actual agency/power structure behind it . The state agency behind this is http://oscca.gov.cn China Office of State Cryptography Administration” commented Dovey Wan in Twitter thread.
Wan, the co-founder of Primitive Crypto, also said: “The key take away is — the developing of new cryptography, hashing algo, even the usage of the tech, will be in the official legal realm. This means you need to follow the CCP standard for all ‘encrypted’ behaviors, which can be VERY broad, from mining to block propagation.”
The Chinese National Development and Reform Commission scraped a draft proposal created in April which recommended crypto mining be put on a list of restricted industries effective Jan 1, 2020. But they reversed their decision with a whole new protocol under the new law.
Overall, this can put America in a tough spot. If we are following the leaders in technology, all the while, our technology is shipped from overseas, by the time you set up your new iphone, another one is being manufactured. This places the US forever behind the curve.
Already, big cities in China use QR codes to buy just about everything. However, here in the States, people can be found still paying rent with checks. One thing is for certain, China has secured their seat at the financial and tech table in the second quarter of the 21st Century.
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