Babbitt Column | Deng Jianpeng: Has Hainan's Blockchain Policy Breakthrough?

Author: Deng Jianpeng (Central University of Finance and Law Professor / PhD supervisor), author e-mail: djp (@) pku.org.cn (remove the brackets when sending e-mail)

(This article was authorised by the author for Babbitt's exclusive online launch)

Since the State Council approved Hainan Province as a free trade port, Hainan has been given high hopes in terms of preferential policies. The block chain quickly became an "Internet celebrity" among ordinary people because of a collective study by the Central Political Bureau on October 24, 2019. Various local governments across the country are actively promulgating blockchain policies. Since entering 2019, Hainan has undoubtedly attracted the most attention in the entire blockchain industry.

On December 1, 2019, a blockchain digital asset transaction related company (for a difficult reason, I changed it here) signed a strategic cooperation agreement with Sanya City, becoming the first group of companies to settle in the pilot zone and plans to The Sanya Experimental Zone established a blockchain offshore digital asset trading laboratory. The forum hosted by the company, other sponsors include Sanya City Government, Hainan Provincial Department of Science and Technology, and the Deputy Governor attended the speech.

Also in early December, at the press conference of the Digital Civilization Conference in Hainan, Wang Jing, director of the Hainan Provincial Industry and Information Technology Department, released the special measures of "chain six".

For a while, the Hainan blockchain policy was given hope by many people. However, careful analysis shows that compared with other parts of China, Hainan's blockchain policy is hardly a breakthrough. The analysis of this article is as follows:

Hainan's "chain of six" includes:

The first is to set up an innovation alliance to strengthen the training of blockchain talents and drive joint innovation. (The author believes that blockchain talent training policies are highly valued in Beijing, Shanghai and Hangzhou and other places.As for whether Hainan has a blockchain This kind of high-end talent training foundation is very questionable. As far as the author knows, Hainan is suitable for retirement, leisure and tourism, and lacks a good entrepreneurial environment like Beishangshen, it is very difficult to retain young high-end talents)

The second is to build a technology system to promote blockchain technology research and innovation, and support universities, research institutions, and key enterprises to carry out key core blockchain technology research; (This has no advantage in Hainan. Well-known universities and blockchain research institutions are concentrated in Beijing In places such as Hangzhou, there is no essential difference between Hainan's policy and the rest of China)

The third is to use the application scenario as a traction to build a blockchain industry ecosystem; (this point has been put into practical applications such as Shenzhen and other places, such as blockchain invoices, Hainan is probably behind)

The fourth is to optimize the development environment and create a loose and friendly atmosphere and environment for the development of blockchain companies. (This Hainan is indeed more lenient than Beijing and Shanghai. At least I have not heard of the blockchain digital under the unified command of the central bank and other regulatory agencies. (Asset trading related companies are rectified)

Fifth, set up special funds to strengthen financial support for the development of industries and enterprises;

Sixth, establish an expert think tank to strengthen Hainan's blockchain industry development think tank support. (Fifth and sixth points we can almost see in the blockchain policy of any other province, so its policy is not special)

In addition, on December 6, the Hainan Free Trade Port Digital Economy and Blockchain International Cooperation Forum was held in Haikou. In his speech, Cao Shiping, chief engineer of the Hainan Provincial Department of Industry and Information Technology, said that blockchain can be used for three major businesses, one of which is digital currency, and Hainan will actively apply to the central government for a "first try" of digital currency research. At the same time, Hainan will launch a blockchain sandbox supervision and fault tolerance and correction mechanism in the future to provide an innovative environment for blockchain development; explore technical standards and models for digitalization of assets, digital asset confirmation, flow, and transactions. The digital currency mentioned by Cao is actually the digital currency that the central bank plans to issue, and it has nothing to do with the kind of blockchain digital assets that some people expect. The sandbox supervision recently implemented in Beijing is aimed at licensed institutions, and has nothing to do with blockchain digital asset trading companies!

According to some people, "Relying on Hainan's policy advantages and the talent resources brought by the entry of blockchain enterprises, Hainan can completely boldly try and boldly innovate, truly dig up the value of blockchain technology, and promote landing as soon as possible. Those who are able to show their strengths in this hot spot. "This kind of remarks indicates that the critics may not have come to the field to investigate and arbitrarily make judgments.

Two well-known companies related to blockchain digital asset transactions have settled in Hainan, naturally it is expected that Hainan will have a breakthrough in blockchain policy. In summary, there is no obvious difference between its policies and other provinces. As far as I know, the deputy governor of the province, the leaders of the Ministry of Industry and Information Technology, the leaders of the Science and Technology Department, and some retired deputy ministerial leaders attended (zhàn tái) the forum held by the blockchain digital asset trading related companies, which is considered to be the current The limit is achieved under policy limits. Put it somewhere else (for example, Beijing or Shanghai).

So why didn't Hainan's policy break through?

The reason is very simple. Transactions involving blockchain digital assets have the nature, attributes, and risks of finance. Financial supervision has long carried out the characteristics of central vertical supervision. Therefore, it is unlikely that Hainan will have a policy “privileged” to liberalize such transactions in the short term.

In my previously published paper " The Risks and Regulatory Paths of Libra " , it was pointed out that the central bank did not absorb the distributed thinking and distributed wisdom of the blockchain. Therefore, even in the face of Libra, the central bank must do it by itself (issue digital currency ), Never thought about letting the two Chinese Internet giants issue stable currency pegged to the RMB overseas to counter the impact of Libra. Although the Chinese Internet giant has accumulated and absolute strength in blockchain R & D and overseas third-party payment for many years! The reason is simple. Financial sovereignty has always been centralized in China.

Some people may say that the provinces have established financial supervision bureaus, which are affiliated with local governments. Doesn't this indicate decentralization of financial supervision? In fact, the local HKMA supervises mainly "non-governmental finance" such as microfinance, and mainly deals with risky events such as illegal fund raising. To put it bluntly, there is great responsibility and little power. Therefore, how can Hainan have a "special policy" that allows blockchain digital asset transactions? Although digital asset trading institutions may be localized, the risks they bring are national (or even global). The central government cannot let Hainan do it alone, and local officials must not risk their own careers. In summary, Hainan does not have such authority, and it is unlikely that there will be a policy breakthrough in the next two or three years.