International FinTech Watch: China Announced Positive Stance on Blockchain Technology

By Jim Bulling and Wendy Li

On 24 October 2019, China President Xi Jinping expressed strong support for blockchain, which was depicted as “a core technology” to promote China’s industry innovation and digital economy development. In his speech, he also noted that blockchain technology has already been applied in a number of sectors like digital finance, internet of things, intelligent manufacturing and supply chain management, and that since China has a solid foundation of blockchain technology, it should seize the opportunity to build up blockchain industrial ecology and accelerate the integration of blockchain, AI, big data and other cutting edge technologies.

Chinese government’s explicit positive stance related to blockchain and other cutting edge technologies was also confirmed by some specific regulatory announcements. For instance, on 26 October 2019, Cryptography Law of the People’s Republic of China was formally passed by legislature and will be effective from 1 January 2020 to regulate data encryption and cyber-security. On 6 November 2019, China’s National Development and Reform Commission removed “cryptocurrency mining” from the “undesirable industry” list, which might be indicative of the government’s relaxation on cryptocurrency restrictions. However, on a cautionary note, on 18 November 2019, a department of China Banking and Insurance Regulatory Commission warned of the usage of blockchain in illegal fund-raising.

Australia and China have developed an increasingly cooperative bilateral and regional relationship in FinTech sector. For instance, in 2017, ASIC and China Securities Regulatory Commission entered into the Information-Sharing Co-operation Agreement, which, amongst other things, included the sharing of “information on regulatory technology (RegTech) development, including experiences with trialling regtech solutions for regulatory purposes”. In a recent speech by ASIC Commissioner Cathie Armour at the China Financial Submit 2019, Commissioner Armour introduced to the Chinese audience FinTech developments in Australian context and discussed ASIC’s participation in international networks.

K&L Gates as a global firm has a well-developed blockchain related legal practice across the world, which also relates to Financial Services, FinTech, Regulatory, Cryptocurrency and ICO. For more information about our blockchain industry experience, please email blockchain@klgates.com.

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