China’s Cryptography Law Piques Local Interest and Stirs Global Market Reaction
On Saturday, Oct 26th, China’s top legislature voted to pass a national cryptography law that will come into effect on January 1st, 2020. The vote was passed just one day after Chinese President Xi Jinping stressed the necessity for China to leverage blockchain technology.
According to an announcement from the National People’s Congress (NPC) Constitution and Law Committee, the new law will encourage research and development on commercial cryptography technologies, while building up an inclusive standardized regulatory system for the market. The new regulatory framework aims to tackle emerging legal challenges in commercial cryptography applications as well as to establish the role of a central cryptographic agency—to lead public cryptographic work as well as create guidelines and policies for the industry.
The cryptography law outlined in the latest draft proposal classifies cryptography into core, common and commercial cryptography which will be strictly managed by state authorities to protect China’s confidential information and state secrets. The law stipulates that the transmission, storage, and disposal of such information must use core and common cryptography for encrypted protection and security certification. For commercial cryptography, it excludes confidential information of the Chinese government and this category applies to citizens and legal entities.
Furthermore, the cryptography law also encourages the cultivation of talents in cryptography, and proposes the inclusion of cybersecurity modules to national education and the training curriculum of civil servants in China. For local governments at or above the county level, they should include cryptography work in their Five-year plan for National Economic and Social Development, and incorporate associated expenses in their current fiscal budget.
The new law also features a section on legal liability related to misconduct ranging from punishments for outright theft and cyberattacks of encrypted information to harsh penalties for those who become aware of security threats or points of failure within the national encryption process and fail to act in the nation’s best interest.
Blockchain Search Trends on WeChat
The nationally adopted Chinese social app—WeChat, has recorded an immense increase in blockchain-related search topics on its platform. Prior to President Xi Jinping’s initial urge for his country to leverage blockchain, the word “blockchain” was searched for less than 800,000 times, and Bitcoin was searched for less than 600,000 times. On October 25th, the day of the Chinese president’s announcement, there were 9.2 million searches for “Blockchain” and 1.3 million for “Bitcoin.”
Although China still bans cryptocurrency trading and its national digital currency is not yet hatched, Xi Jinping initial announcement on the 25th also seems to have lit a fire within the global cryptocurrency and blockchain industry. Shortly afterward, all cryptocurrencies appeared to find new life against the recent market downturn and in majority have rallied to double-digit percentage price increases.
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