Chinese Blockchain-Based Media Projects to Collect User Data, Censor Information under Proposed New Rules

All stakeholders can comment on the new cybersecurity proposals until November 2.

China’s internet regulator, the Cyberspace Administration, has published new rules for blockchain-based information service providers, the South China Morning Post (SCMP) reported on Monday. The proposals envision the same regulations for social media projects and online forums using distributed ledger technology (DLT) as for other online services of this type.

The Cyberspace Administration wants to force blockchain-based service providers to require that users register with their real name and national ID card number. Moreover, the agency will make it mandatory to store client data and give the regulator access to that information as part of on-site inspections.

The authorities will also oblige such projects to censor user posts on national security grounds. China has a network of state censors monitoring media and social platforms and sending mandatory lists with information that must be changed or erased.

A major problem with the draft regulation is that it fails to consider blockchain as a technology which does not allow information to be corrected or deleted, thus contravening China’s rules on user data, Xu Kai noted in an online post. Moreover, the regulatory package includes no mechanisms for safeguarding the rights of DLT projects, the Beijing-based lawyer added.

The Cyberspace Administration drafted the proposals after a scandal erupted in April this year, when an anonymous user posted an open letter on the Ethereum network. It alleged a sexual abuse cover-up took place over 20 years ago at a leading Chinese university. The user attached the document to an Ethereum (ETH) transaction to himself, and since the blockchain is public, anyone can see the letter.

The Chinese internet regulator has yet to specify when the new rules will be implemented. The public consultation will run until November 2. The package puts DLT-based media ventures on a par with existing social media applications and online forums, which are governed by a cybersecurity law Beijing enforced in 2017.

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