As China’s financial institutions increasingly turn to blockchain encryption technology to power their business operations, the central bank is stepping up efforts to ensure that the industry uses common standards for the emerging technology, reported Caixin.
The People’s Bank of China issued regulations on the use of blockchain to banks and other financial institutions including securities, insurance and fund-management companies, a source in the financial sector with knowledge of the matter told Caixin. They mainly cover the evaluation of the design, performance and security of blockchain applications to ensure they are stable and secure, the source said.
Many industries, including the financial sector, have started to integrate blockchain technology into their businesses operations. According to a white paper issued by Industrial and Commercial Bank of China Ltd. (ICBC) in April, 420 companies were providing blockchain information services in China at the end of 2019, including 72 that offered 120 financial services based on the technology.
Blockchain is particularly useful in financial applications because it can help build trust and credibility among parties to a transaction as it creates permanent, unalterable, traceable records, the white paper said. “For existing financial businesses, blockchain provides a solution to transfer their “trust base” from high-cost offline to low-cost online,” the ICBC authors wrote.