According to an examination of official records and conversations with business insiders, the expansion of the blockchain sector in China has quickened in 2022, with a total of 1,821 services registered with the nation’s internet regulator.
At the end of 2018, the Cyberspace Administration of China (CAC) began publishing fresh lists of recent initiatives every two to four months instead of every six to eight months from March 2019 through 2021, which sped up the certification process for new blockchain services.
In three years, the organization has published 197 listings, with blockchain initiatives including services for legal, financial, agricultural, and intellectual property protection.
The expedited release timeline demonstrates Beijing’s commitment to creating blockchain applications that support the nation’s technical and economic objectives while tightly controlling the more decentralized uses of the technology for which the technology is best known.
With the introduction of bitcoin, the nation outlawed the trade of cryptocurrencies, essentially outlawing the trading of non-fungible tokens (NFTs) on public blockchains like Ethereum.
However, a growing number of Chinese businesses are exploring new uses for blockchain, which may create a sizable market for products based on the technology. Blockchain is a sort of immutable distributed ledger that is maintained by many computer nodes on a network. According to market research company IDC, China’s blockchain market may be valued at more than US$3.2 billion by 2025, with a compound annual growth rate of 47% between 2020 and 2025.
According to Jiang Lifeng, vice president of the Hangzhou-based blockchain service company DataQin, which has three legal and financial services registered with the CAC, “becoming registered [with the government] is not difficult, and it is a method to stay close to regulators.”
Since its launch in 2016, DataQin has made the legal industry one of the focal points for its consortium blockchain known as Baoquan Chain. Jiang said that Baoquan Chain can “transform data into evidence and make evidence transmissible” by digitizing protected notary services. Consortium blockchains set restrictions on who may join the network, enabling them to function in the stringent regulatory environment of mainland China.
When the Hangzhou Internet Court permitted evidence obtained using Baoquan in 2018, marking the first case in China to employ blockchain-based evidence, DataQin’s concentration on law had paid off.
Even China’s Supreme People’s Court has endorsed the potential industry, stating that it hopes to “create a blockchain alliance between the court and all trades of the society by 2025.”
The majority of the largest IT companies in China, as well as several of their subsidiaries, have blockchain services registered with the CAC. The listings include Tencent Holdings, JD.com, Xiaomi, NetEase, and Baidu. There are also representatives from Ant Group, the fintech unit of Alibaba Group Holding, which owns Alipay, and the South China Morning Post.
Blockchain-as-a-Service (BaaS), which enables users to use pre-existing blockchain technology like smart contracts in their own enterprises, makes up the bulk of registered services. These services are for legal and financial purposes.
According to Catherine Hong, a senior market analyst who follows the BaaS market at research firm IDC, “It makes sense for companies to come up with general BaaS platforms as opposed to vertical blockchain applications for China’s blockchain development and the investment road map in new technology.”
Over the last two years, market revenue has continued to expand at a rate of roughly 90%, she noted.
Beijing has accelerated the race to create a blockchain with “Chinese features” by attempting to separate the technology from its most well-known application cases outside of China.
According to Bo Zhengyuan, a partner at research company Plenum, “the majority of China’s blockchain applications will be in the form of BaaS, as the government has already ruled out other popular approaches related to blockchain.”
