People’s Bank of China issues rules on blockchain
July 28, 2020 Category China News Round-up, Weekly
The People’s Bank of China (PBOC), the central bank, has issued documents and evaluation rules regarding the application of blockchain in financial institutions including banks, security companies and insurance firms. It is the first time China’s central bank has issued detailed rules regulating the application of blockchain technology, according to the Global Times. The document requires financial institutions to evaluate blockchain on three major fronts, including technology, performance and security, to judge whether blockchain can ensure the safe and stable operation of financial infrastructure. The document also gives detailed technological indicators, assessment methods and standards regarding product design, software development and system operation.
According to the notice, financial institutions are required to set up and improve risk mechanisms for blockchain application, and to conduct external safety assessments regularly to promote the application of blockchain. It urged industry associations to strengthen management in the application of blockchain technology, and to set up internal mechanisms for self-inspection and information sharing. The rules issued by the central bank apply to banks, brokers, fund companies, futures companies, private investment funds, Union Pay and non-bank payment institutions.
Shentu Qingchun, CEO of Shenzhen-based blockchain company BankLedger, told the Global Times that the new rule is of great significance as it sets a legal basis for financial institutions on how they can explore the potential of blockchain technology. The documents were issued as Chinese policymakers have been doing pilot tests of a sovereign digital currency in selected cities in the country this year. A number of financial institutions, including the Agricultural Bank of China (ABC) and the Industrial and Commercial Bank of China (ICBC), have in the last two years been scaling up efforts to apply blockchain technology to aid their financial services such as internet financing and asset management.
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