Last week China issued a set of rules mandating all blockchain service providers to register with the government within ten days. Providers include business, individual nodes, and just about anyone involved in developing, using, or owning crypto technology. The new regulations require registrants to release personal account information including metadata of their client’s database (passport, IDs, and any form of KYC information provided at time of opening an account). To say that the mandatory release of private information and transfer to a foreign government is worrisome is an understatement.
Bitcoin is the next evolution in trade, financing, and legal tender. It represents a leap forward in global digital currency management and finance systems. As such, it is the core of a new technology race which China is keen to win and control. And that in essence is the whole point of regulation; to control population, industries, and markets. Control is an integral component of the Chinese regime. Embedded into its national credit and justice system, personal compliance and allegiance to the government and the party determines approval of loans and individual punishment. This draconian culture has been identified by developers who worry about monopoly and centralization of Bitcoin through mining. It has also grabbed attention at the political level.
The Dragon Menace
Bitcoin is becoming a new political battleground. The White House is waking up to the realization that China is dominating the crypto space. Through its Fintech companies and venture capital investments firms, it is capturing key sectors vital to the control of Bitcoin. Bitmain, the largest (Chinese) Bitcoin mining company controls 80% of the mining equipment market. At over $70 million in blockchain and crypto-related investments, Node Capital, Zhen Fund, and Ceyuan Ventures are just a fraction of the combined Chinese investment. In addition, China is working in developing a national blockchain project with direct government funding. There is almost no industry in China that is not investing in crypto technology in some form.
The new laws are nothing short of a deliberate intrusion into businesses’ operations and personal privacy. It is an attack on anonymity to gain financial control of crypto currency users. However, as strange this totalitarian form of rule is to Westerners, this is in line with China’s way of life.
It is important to understand that the concepts of decentralization run opposite to a centralized form of government. And this is expressly why ICOs, trading, exchanges, and even mining are banned in China. In that content, it should be no surprise that a centralized national blockchain is being developed; one that can serve the purposes of the state. Therefore, these new laws are detrimental to the advance of Bitcoin and jeopardize investors as they surrender all operational control to the Chinese government. And leaves all invested in crypto exposed to censorship and manipulation without recourse or even an explanation.