The President of China, Xi Jinping, held a study session on blockchain technology, where he stated that the country should seize opportunities in distributed ledger technology. One day after that statement, the Standing Committee of the 13th National People’s Congress in China passed new cryptography regulating law.
The Proposal
While China is still keeping cryptocurrency trading under a ban and its national digital asset is not yet complete, further research into cryptography could prove very beneficial. According to statistics published by the Cyberspace Administration of China, there are over 500 such projects since January this year. The application for such technology could not only be for the financial sector, but also for fields like research, administration and many more. The goal of the new law is to face the emerging legal and regulatory challenges in the application of commercial cryptography, which will have an important role in the development of the Chinese economy.
During his statement, President Xi Jinping added that it would be “necessary to implement the rule of law network” into current and future blockchain systems. He also said that testing this new technology should be widespread and adopted. Investment into training platforms before implementation is also a great idea. In the meanwhile, China is preparing its own national stable coin, resembling the Libra project.
State of Adoption
Even though these are recent news, a lot of institutions in different sectors have started their research in cryptography technology. There is no enough information available in order to give you the complete picture, but let’s look at what we know.
Financial Sector
Two major state-owned national banks and four local banks have filed for 14 blockchain projects. The Industrial and Commercial Bank of China (ICBC) is the world’s largest bank by assets and it has registered two blockchain projects. Also, the Ping An Bank has filed for two projects based on blockchain technology as well. It became the first Chinese financial institution in the R3 enterprise blockchain alliance in 2016. Ping An Bank revealed that it uses a data analytics SAS platform and a voting and decision-making system that is blockchain-driven. The bank has adopted a blockchain network, called FiMax, in order to improve data sharing and privacy processes.
Union Pay, the Visa or Mastercard counterpart for China, also registered two blockchain projects including a digital certificate application and a tracking platform that utilizes the new technology. There are many more projects that exist, but not enough information is available about them. The most recent information is from two major banks announcing their projects. China Construction Bank (CCB) is one of them, which is revamping its trade finance platform based on blockchain since the trading volume on it reached $53 billion. Also, the Bank of China has made its first international transfer to South Korea via its patented blockchain payment system in 2018.
Other Large Players
On the list are Baidu, Alibaba and the telecommunication giant, Tencent. The search-engine leader, Baidu, released its blockchain white paper containing information about its patented Xuper Chain, which will pave the way for future blockchain services by providing the infrastructure. Last year, the company launched its iteration of the internet sensation CryptoKitties, called Letsdog. The project was released through Baidu’s blockchain subsidiary – Duxiaoman. Other projects that Baidu is working on is the Baidu Blockchain Engine, which is providing cloud services, and a Token that leverages blockchain in order to protect intellectual property rights of digital content.
On the other hand, Alibaba has been the most active one, with a total of 90 blockchain-based projects, which surpasses IBM and the Bank of America. Tencent has also been pretty busy building a suite of blockchain services, which were first announced in 2017 with the first white paper. The company also filed for projects Tencent Blockchain and Tencent Cloud TBaaS Blockchain. The Chinese government was heavily involved in many large plans, which were present in the list, ranging from communication backbones to innovations in legal and land development. The list of companies that are adopting the technology continues to grow. The video streaming company iQIYI, which is China’s version of Netflix, filed that it Is using Baidu Xuper Chain Supernode in order to improve its streaming services. One of the largest science and genomics companies in China, BGI, is also on the list with its BGI Blockchain BaaS Platform, which will be used to conduct genetic analysis.
Final Thoughts
China is becoming the driving force in blockchain technology adoption. Its biggest companies, along with the government, are realizing the potential it has for improving almost any aspect of the economy. We can only speculate if China’s stand regarding the trading of cryptocurrencies will change, but the hopes are high that with the further adoption of the distributed ledger technology and the release of the national stable coin, the landscape might change.