Primitive Ventures’ Dovey Wan on Significance of China’s New Cryptography Law

On October 26, the Standing Committee of the 13th National People’s Congress in China revealed that a new cryptography law will go into effect January 1, 2020, according to local news outlet Xinhuanet.

The announcement comes only a day after Chinese president Xi Jinping called on the citizens of the $12 trillion economy, the second-largest in the world behind only the US, to seize strategic opportunities in blockchain technology.

China is still maintaining its ban on crypto asset trading, even though Bitcoin (BTC) ownership is recognized as personal property that’s entitled to protection under the nation’s laws. The country, which is home to nearly 1.5 billion people, is also developing a sovereign digital currency.

Cryptography, as a key underpinning of distributed ledger technology (DLT), might play a vital role in the nation’s push to become more competitive in the rapidly evolving, global blockchain industry.

China’s new cryptography law has been designed to address new regulatory and legal requirements in commercial cryptography use-cases, as they’re playing an important role in supporting and improving China’s diversified economy, according to the law’s recent draft proposal.

The proposal states:

“Clear guidelines and regulations are needed to evaluate commercial cryptography technologies used in the major fields related to the national interest as the current ‘loose’ system is not suitable for the industry anymore.”

China’s national congress said the new law will support research and development (R&D) efforts on commercial cryptography technologies, while creating a comprehensive, standardized regulatory framework for the emerging market.

The Chinese congress prepared a draft proposal for the new law in July 2019, requesting feedback from the general public.

The proposal addresses various issues including how compatible the current industry standards should be with other similar cryptography systems throughout the world, to whether organizations should voluntarily verify commercial crypto-related use-cases with regulators.

China’s congress says the new law may promote or help the nation’s educational projects, which include public exhibitions, to spread awareness about cryptography among government agencies, local firms and social groups.

Founding partner at Primitive Ventures Dovey Wan took to Twitter to explain the relevance of China’s new cryptography law. 


Wan noted that the new law is aimed at “standardizing the cryptographic application and management of passwords,” among other requirements.

After reviewing the draft version, which has been released before the formal version, Wan learned that China’s “central cryptographic agency (CCP) will have unified leadership over the national cryptography work, [which] formulates key guidelines and policies for national cryptography, … and coordinates major [activities involving] national security.”

She added that China’s state department “encourages and supports the research cryptography, protects the intellectual property rights of related technology according to law, and promotes the progress and innovation of cryptography and public/private key technology.”

Furthermore, “no organization or individual may steal other people’s encrypted information, illegally invade other people’s password protection system, or engage in activities that endanger national security, social public interests.”

According to Wan,

“The key takeaway is:  the development of new cryptography, hashing algorithms, [and] even the usage of the tech, will be in the official legal realm. This means you need to follow the CCP standard for all ‘encrypted’ behaviors, which can be VERY broad, from mining to block propagation.”