What the New PRC Blockchain Regulations Mean
Initial Coin Offerings (“ICO”) hit the global zeitgeist with a bang in 2017. The ICO investment phenomenon coupled with the meteoric rise of cryptocurrencies raised the profile of the underlying distributed ledger and blockchain technologies. However, along with the market boom came the fraudsters. These bad actors moved the PRC government to take the hardline measure of banning all ICOs and their marketing on 4 September 2017. The Blockchain Regulations should give heart to the crypto-community that the PRC authorities are evolving their position in respect of ICOs and blockchain away from the hard ban. In many ways the closest analogy to the Blockchain Regulations is the PRC Cyber Security Law of 2017. Both pieces of legislation sought to regulate new technologies and both were passed and implemented quickly after an announcement of the draft for public comment. As was the case with the PRC Cyber Security Law, the Blockchain Regulations are general but do provide a basic framework for the sector. However, although the trend towards regulation and away from prohibition is clear, it will take time for interpretation and enforcement guidelines to develop. We expect local officials will act conservatively and take a wait and see approach as this area of law continues to evolve.