- Jason M. Weinstein
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- Alan Cohn
+1 202 429 6283
- Richard K. Wagner
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The Blockchain in China
China is emerging as a key nation for blockchain technology and has the potential to become its largest market. China’s Central Bank is also considering the technology as an option for its design of China’s digital currency and significant resources have been allocated on research into blockchain and related technologies. There is also interest in blockchain technologies across the financial services sector in China. For example, in May 2016, the PingAn Group, the second biggest insurance company in China, became the first Chinese member of the R3 Blockchain Consortium. In China today, one of the areas blockchain has already drawn tremendous attention to is Bitcoin.
China has become a major power in the multibillion-dollar Bitcoin industry. With approximately 42% of total transactions worldwide currently taking place in China, China could greatly affect the price of Bitcoin, as it did in driving the price to a record high of over $1000 in 2013.
In Bitcoin mining, another aspect of Bitcoin, China plays an even greater role. Several mining pools in China already rank among the top worldwide, with the largest—F2Pool (“fish pool”)- having 27% of the whole network’s computational power. In addition, colossal mines deploying as many as 100,000 machines have been built in exotic remote locations throughout China-- cold areas where power is cheap and stable such as Kangding County in Sichuan Province near Tibet, the Ordos region in Inner Mongolia, and Liaoning Province in Manchuria, China’s northeast.
The rising Bitcoin industry in China has also given rise to several major local companies which now enjoy significant power in rule-setting for the Bitcoin networks. One of these is the Beijing-based Bitmain, which manufactures and sells mining machines and also operates one of the top mining pools called the “ant pool”. Other companies include Beijing-based Yibite, which owns the F2Pool, Shanghai-based BTCC which owns a trade exchange and the third largest mining pool in China, and Beijing-based HaoBTC, which owns a trade exchange and a large mining facility in Sichuan.
Steptoe’s China Practice Group monitors developments in blockchain and those peripheral issues related to its development, including complex due diligence and testing, information law compliance, risk and operational planning, and trade secret and other intellectual property protection. Our lawyers are noted for providing practical advice in cross-border transactions that often present challenging legal and regulatory issues and for China-related investigations and complex disputes. Our clients regularly look to us to assist with resolving issues that arise in connection with negotiations, establishment, management, financing, and in the operation of China-related business activities.
For more resources about the blockchain and to learn more about our Blockchain Team, please visit Steptoe’s Blockchain Team site.