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Blockchain was on the agenda at the annual Two Sessions meeting of China’s legislature. Delegates and political leaders also discussed cryptocurrency, calling for efficient, clear and strict regulations.
For non-currency blockchain, representatives expressed enthusiasm about a wide range of applications, which will likely receive state support. We count nine applications specifically named.
Government support matters in Chinese tech: the government has the absolute right to decide the life and death of a company. The Communist Party of China remains very cautious about crypto assets, but is growing more supportive of other blockchain uses.
Blockchain-powered companies have to have their eyes on Chinese policy so they don’t cross the line and get eliminated from history—and so that they can get ahead of opportunities for regulatory support and subsidies.
Clarity for crypto?
Cryptocurrency restrictions are going to remain strict, but more clarity could create some openings. Currently, financial institutions are completely banned from dealing in digital assets like Bitcoin, but cryptocurrency in general is not forbidden. However, confusion about what is and isn’t allowed has slowed development of the field.
Most comments on virtual currency called for strict supervision and continuing the complete ban on asset trading. But we can expect some limited steps toward regulated crypto.
Wang Jingwu, deputy to the 13th National People’s Congress and director of the Financial Stability Bureau of the People’s Bank of China (PBOC), proposed a “regulatory sandbox” for financial innovation, suggesting that the PBOC take the lead. Wang’s comments are a sign of possible change in the country’s regulatory approach.
As a blockchain technology, cryptocurrency is one of the most active areas of fintech innovation. Media often avoid mentioning blockchain directly because of political sensitivity, using comments on “fintech” or “financial innovation” to make their points. People who want to do blockchain-related business should pay attention to fintech talk.
Crypto will remain tightly limited in the coming year, but we may see some limited experiments. If the authorities follow through on publishing more regulations, crypto developers will at least get more clarity on what they are allowed to explore.
Green light for other blockchain
According to Interchain Pulse, a leading crypto media outlet in China, 34 proposals, opinions and speeches at the Two Sessions covered fintech and blockchain. This is up 61.9%, from 21 in 2018. This year, 23 of the proposals mentioned blockchain, 11 during media interviews and group discussions.
A majority of the proposals focused on the application and supervision of blockchain: 14 and 5, respectively. It is clear that application is the foremost concern for the representatives. Application scenarios mentioned include health, smart cities, governance, environmental protection, supply chain financing, credit information systems, charity, intellectual property and food safety.
We’ve put together a list of key blockchain mentions that may signal opportunities in non-currency applications.