Blockchain is a term within the field of information technology. Simply put, blockchain integrates existing technologies like data encryption and timestamps to enable data and information operations among decentralized users without relying on a central server.
At its core, it is a shared database. Compared to existing internet information technologies, the data or information stored in a blockchain is characterized by its independence from central servers (decentralization), high reliability, and resistance to tampering or forgery. These features establish a solid foundation of "trust" and create reliable mechanisms for "cooperation."
U.S. Laws and Policies on Blockchain
Although the United States recognizes and encourages the development of blockchain technology, it maintains a cautious regulatory approach toward this emerging innovation. Regulatory oversight of blockchain in the U.S. involves collaboration among several agencies, primarily the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Internal Revenue Service (IRS), which also issues relevant guidelines.
New York State serves as a pioneering example. As early as 2014, New York proposed integrating cryptocurrencies into its regulatory framework. In July 2014, the New York State Department of Financial Services (NYDFS) introduced a comprehensive regulatory structure known as the "BitLicense" for virtual currency activities. This framework officially took effect on June 3, 2015, making New York the first state in the U.S. to implement full-scale cryptocurrency regulation. By June 2016, NYDFS had received 26 license applications.
New York’s initiative prompted other states to follow suit. On June 19, 2015, Connecticut Governor Dannel Malloy signed House Bill 6800 into law. This bill amended and supplemented the state’s Money Transmission Act by redefining virtual currency and requiring all businesses involved in virtual currency transfers to comply with licensing requirements.
Additionally, the revised law stipulated that applicants must disclose whether they intend to transmit monetary value via cryptocurrencies. Virtual currency transmitters must also adhere to bond requirements set by the state’s Banking Commissioner, with conditions tailored case by case. While other states have not developed regulatory frameworks as comprehensive as New York’s, many have enacted statutes that reflect their stance on cryptocurrency regulation.
Legal Status of Blockchain in China
Currently, there is limited specific legislation targeting blockchain in China. However, this does not imply a legal vacuum. Since blockchain represents an upgrade to existing computer and internet information technologies, its legal framework is inherently connected to laws governing computing and IT.
Like other sectors, the applicable legal system for blockchain consists of multiple layers, including basic laws, administrative regulations, judicial interpretations, departmental rules, and other normative documents.
Basic Laws
Criminal provisions applicable to blockchain include offenses such as "Violation of Personal Information Rights," "Failure to Fulfill Network Security Management Obligations," "Illegal Use of Information Networks," and "Aiding Information Network Criminal Activities." General civil law norms are mainly found in the Civil Code, covering personal information security, digital assets, and civil liability.
Other Relevant Laws
These include legislation in computing and IT, such as the Cybersecurity Law, E-Commerce Law, Electronic Signature Law, and relevant decisions issued by the National People’s Congress.
Administrative Regulations
Key regulations include the Computer Information System Security Protection Ordinance and the Internet Information Service Management Measures. Although the former primarily outlines the responsibilities of regulatory authorities, it serves as a higher-level law applicable to blockchain. The latter regulates internet business activities, which also extends to blockchain applications in commercial operations.
Departmental Rules
Notable examples include the People’s Bank of China’s Implementation Measures for Financial Consumer Rights Protection and the Cyberspace Administration of China’s Blockchain Information Service Management Regulations. The former aims to safeguard personal financial information and industry security, while the latter represents the latest and most comprehensive set of rules directly regulating blockchain.
Judicial Interpretations
These include provisions from the Supreme People’s Court on issues such as the authentication of blockchain-based electronic evidence in internet court cases.
Additionally, regulatory authorities have issued non-binding notices and announcements in response to rapid blockchain developments, such as the Notice on Preventing Bitcoin-Related Risks and the Announcement on Preventing Token Issuance Financing Risks. Although not formal regulations, these documents offer insight into regulatory perspectives and trends, providing valuable guidance for legal research and corporate compliance.
Finally, industry leaders and institutions have contributed to standardization and normative exploration through technical and service standards, industry forums, and whitepapers like the China Blockchain Technology and Application Development Whitepapers (2016 and 2018), Blockchain Reference Architecture, and Blockchain Data Format Specification. These resources serve as important references for legal professionals and enterprises seeking compliance guidance.
Compliance for Blockchain Projects
Blockchain project compliance currently involves two main aspects:
Token Issuance Compliance: Foundation + Legal Compliance Opinion
This includes Initial Coin Offerings (ICOs), Initial Exchange Offerings (IEOs), and similar models. Projects typically establish an overseas entity, often a Singapore-based foundation, and obtain a legal compliance opinion from a Singaporean lawyer. This opinion includes modifications to the whitepaper and a proof that the token is not a security, ensuring alignment with Singaporean law. The legal opinion is also necessary for subsequent exchange listings.
Exchange Compliance: Entity Company + Digital Currency License
Exchanges often comply by applying for licenses through locally registered companies that serve as regulated entities. Common licenses include the U.S. MSB license, Canadian MSB license, Singapore MAS license, and Australian license. A typical approach involves setting up a Singapore foundation as the entity, applying for a digital currency license, and using the same foundation for issuing platform tokens later. Compliance generally revolves around non-profit foundations, legal opinions, and exchange licenses, tailored to the project’s direction.
Globally, over 100 banks are exploring blockchain applications. Major internet companies like BAT (Baidu, Alibaba, Tencent) and JD.com, as well as tech leaders such as IBM and Microsoft, are actively implementing blockchain in finance. The pursuit of blockchain application and compliance continues to evolve.
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Frequently Asked Questions
What is the main regulatory difference between the U.S. and China regarding blockchain?
The U.S. employs a multi-agency approach with state-level variations, while China integrates blockchain into existing IT and financial regulations, emphasizing centralized oversight and gradual legislative development.
Why are Singapore foundations commonly used in blockchain compliance?
Singapore offers a clear regulatory framework and political stability, making it a preferred jurisdiction for establishing non-profit entities and obtaining legally recognized compliance opinions for token sales.
How do blockchain regulations affect international business?
Regulations impact cross-border transactions, data privacy, and licensing requirements. Businesses must navigate both home and host country laws to ensure compliant operations and avoid legal risks.
What are the penalties for non-compliance in blockchain activities?
Penalties may include fines, license revocation, or criminal charges, depending on the jurisdiction and severity of the violation. adhering to local regulations is essential to mitigate these risks.
Are blockchain legal opinions mandatory for all projects?
While not universally mandatory, they are often required by exchanges for token listings and by investors as proof of due diligence and regulatory adherence.
How often do blockchain regulations change?
Regulations evolve frequently due to technological advancements and market dynamics. staying updated through legal advisories and official announcements is crucial for maintaining compliance.