New rules from the Cyberspace Administration of China will force blockchain companies to censor information deemed 'threatening' to national security and allow authorities to access and inspect user data. Photo: Reuters

New of regulations from the Cyberspace Administration of China demand more personal information from users of blockchain-based information services. As well as seeking to remove the in-built anonymity from the technology, China also wants to censor content and inspect user data.

This latest crackdown on the nascent technology is in line with Beijing’s general suspicion of crypto-currencies and anything associated with them. According to local state-linked media reports Chinese users that want to use blockchain services will have to use their real names and national identification details.

The proposed new rules will also force companies offering services using distributed ledger technology to censor information deemed “threatening” to national security and allow authorities to access and inspect user data. Industry critics will argue that this totally negates a core foundation that many public blockchains are built upon: the preservation and protection of private encrypted data.

The regime’s suppression of blockchain services is not new. In April, a Chinese student activist tried to use the Ethereum blockchain to publish an open letter on the alleged cover-up of sexual harassment at a top university. This method was chosen as social media censors on WeChat and Weibo originally blocked the content.

Shortly after this information was published via Ethereum, a new blockchain app called Xiao Xieyi – ‘Mini Protocol’ in English – launched on WeChat, China’s billion-plus social network platform but after one day the service was suspended.

It’s clear that China does not want public blockchains or its citizens having freedom and privacy for their own data. Beijing’s ban on crypto-currency trading and initial coin offerings last year has resulted in blockchain startups leaving the country to seek out more open trading environments.

It is not the first time China has implemented draconian internet laws. Regulations requiring real name and identification for registering for social media in China are already in place. A sweeping cyber-security law, that gives the powerful State Administration of Press, Publication, Radio, Film and Television access-all-areas rights, came into force in 2017 and has been widely criticized for privacy violations. Earlier this month another set of regulations gave security authorities the power to enter the premises of companies offering internet services and inspect data.

A recent report by American academics Ben Kaiser, Mireya Jurado and Alex Ledger examined how China’s “Great Firewall” internet censorship mechanism could be exerting “strong influence” over the distribution and price of Bitcoin. To what degree this is happening is, at this time, uncertain. However, it seems clear that Beijing now intends to control its own blockchain networks.