New Chinese Crypto Law to Control Passwords
China is one of the countries whose outlook on cryptocurrencies will be crucial in 2020. How they deal with Bitcoin mining and trading here in the months to come could give us hints about the future of digital money. Therefore, it is interesting to see details of the new Chinese crypto law that has just come into force.
What Does This Law Cover?
It has been reported that this new legislation became effective at the start of January, 2020. The law was passed in October 2019, but its importance was largely missed at that time. It was reported back then as a way of regulating cryptography. No real details were known about it, though.
The details that are now known show us that it is focussed on blockchain technology passwords. This Chinese crypto law sees passwords divided into three different kinds. These are core passwords, common passwords and commercial passwords.
The Government plans to closely regulate the use of core and plain passwords, which protect state secrets. They are also planning to look at the commercial side, which would cover anything that isn’t classed as a state secret.
Why Does This Matter?
The full implications of this new law in China aren’t yet known. However, it is thought that officials are looking to take more control over blockchain technology and how it is used.
This could pave the way for them to issue their own official cryptocurrency. It has been widely reported that the People’s Bank of China is planning to launch their own state-backed digital money soon. 2020 could be the year that the Asian giant becomes the first country to issue its own state token. Therefore, this new Chinese crypto law could be seen as putting the legal framework in place for this to happen.
Known as a CBDC (Central Bank Digital Currency), the release of this sort of coin in China will change the global landscape. Mixed messages coming out from Beijing have left it unclear whether their CBDC would run alongside Bitcoin and other coins. Or would it replace them? It does appear to be increasingly clear that the Chinese government likes blockchain technology. But it doesn’t seem as keen on its citizens using this technology to trade altcoins.
How will the rest of the world react if China introduces a state-backed cryptocurrency as the only digital money allowed there? It seems unlikely that other countries would be as drastic as this, but the Chinese crypto law has reminded everyone that the future of crypto could take some big twists this coming year.