The law will encourage research and development on commercial cryptography technologies in China. Also, this technology will allow building an inclusive standardized regulatory system.
The Standing Committee of the 13th National People’s Congress in China passed a cryptography law which will be effective since January 1st, 2020, according to what local media recently reported.
This announcement took place one day after Chinese President Xi Jinping said the country should look for more opportunities using blockchain technology. Jinping called on the nation’s citizens to seize valuable opportunities by adopting Distributed Ledger Technology (DLT).
The interesting aspect is that China still does not allow transactions with cryptocurrencies and the Chinese sovereign digital currency has not been launched yet. The text is largely focused on government centralized password management and does no mention cryptocurrency.
But cryptography, based on blockchain technology, will help the country to be more competitive in the ecosystem. It is a key component underpinning cryptocurrencies such as Bitcoin. That is the reason that drives the project.
Legal requirements in commercial cryptography use-cases will be explained and addressed in the proposed law. The reason is the potential of this system to improve and boost the economy of China.
“Clear guidelines and regulations are needed to evaluate commercial cryptography technologies used in the major fields related to the national interest as the current loose system is not suitable for the industry anymore”, the draft law says.
Developing New Technologies
The new law aims to tackle emerging regulatory and legal challenges. China’s National Congress said the law will encourage research and development (R&D) on commercial cryptography technologies. Also, this technology will allow to build an inclusive standardized regulatory system.
Last July, China’s Congress published a proposal related to this draft. Congress asked for feedback from the general public and now the law would be effective.
The proposal covers important issues such as the compatibility of industry standards with other international cryptography systems.
Another positive aspect is that the Chinese congress said that the new law will support the educational efforts of the country and will allow improving the management of passwords.
This would include public presentations and spread awareness about cryptography among government workers, local companies and different social groups.
However, last week, Mark Zuckerberg, Facebook’s president, warned that Chinese superiority in the digital currency space could put the U. S. dollar at risk in an attempt to “sell” lawmakers his plans for the Libra digital coin.
“China is moving quickly to launch a similar idea in the coming months. We can’t sit here and assume that because America is today the leader that it will always get to be the leader if we don’t innovate”, Zuckerberg argued in an official statement.
The truth is that now, with the approval of the government in this aspect, China is proving how to be more competitive in the blockchain space and also it is developing new blockchain solutions to benefit its financial system and offer a new alternative to the crypto-community.
By María Rodríguez