Chinese regulators are accelerating efforts to require banks to integrate blockchain technology into their core operations. This move is not merely a technological upgrade, but reflects a long-term strategy to reshape how financial data is managed, shared, and utilized across the economy.
The new policy, jointly issued by the State Taxation Administration and the National Financial Regulatory Administration, calls on banks to collaborate with local governments to deploy blockchain alongside privacy-preserving computing technologies. The goal is to build a data-sharing system that ensures both accessibility and confidentiality, thereby improving credit allocation and reducing fraud risks.
At a technical level, blockchain is used to guarantee the integrity and immutability of tax records, while technologies such as secure multi-party computation enable data processing without exposing sensitive corporate information. This creates a more reliable data environment for banks, especially when evaluating small and medium-sized enterprises that often struggle to access credit.
What Is China Really Aiming For?
According to many international experts, this is less about blockchain itself and more about control over data.
Professor Eswar Prasad argues that China is building a “data-driven financial architecture,” where the state can monitor, assess, and allocate resources more efficiently. In this context, blockchain serves as an infrastructure layer for standardizing and verifying data, rather than enabling true decentralization as seen in public crypto networks.
Meanwhile, Yaya Fanusie describes China’s approach as a “controlled blockchain” model, where the technology is leveraged to enhance governance efficiency while remaining under strict state supervision.
This explains why China can simultaneously ban cryptocurrencies and promote blockchain. These two directions are not contradictory but complementary: eliminating uncontrolled financial systems while building a state-led digital infrastructure.
Real-World Implementation in China
In practice, China has been deploying blockchain across multiple sectors for several years, particularly in tax administration.
In Shenzhen, a blockchain-based electronic invoicing system has been in operation since 2021, helping reduce tax fraud and enabling real-time data traceability. This is considered one of the most successful public-sector applications of blockchain.
At the same time, China is developing the Blockchain-based Service Network (BSN), a national infrastructure platform that allows businesses and government agencies to deploy blockchain applications at lower cost and with standardized protocols. BSN is not a public blockchain, but a controlled ecosystem aligned with Beijing’s regulatory approach.
Another key development is the integration of blockchain with central bank digital currency. The digital yuan (e-CNY) is gradually being incorporated into the financial system as an interest-bearing digital deposit, opening the door to deeper integration between transaction data, tax data, and credit systems.
Recently, the People’s Bank of China expanded the number of participating banks in the e-CNY system, signaling a significant scale-up in real-world deployment.
Global Perspective: Opportunity or Risk?
Some international experts believe this model could help China address long-standing financial challenges, particularly the lack of transparent data and limited credit access for small businesses.
However, concerns remain about privacy and surveillance. Integrating tax, transaction, and credit data into a unified system could create what some describe as a “super financial database,” where nearly all economic activities are traceable.
The International Monetary Fund has warned that while centralized data-driven financial systems can improve efficiency, they may also increase risks related to control and systemic dependency.
A New Model for Digital Finance?
Overall, China is not simply “adopting blockchain,” but constructing a new digital financial model in which:
Data becomes the core asset
Blockchain functions as a verification and data-sharing layer
Banks evolve into data-processing intermediaries rather than just capital providers
The state remains central in controlling and orchestrating the system
This model could become a reference framework for emerging economies seeking to leverage technology while maintaining financial control.
Still, a critical question remains: does this represent a leap forward in economic efficiency, or an expansion of financial surveillance on an unprecedented scale?
The answer may depend on how other countries respond and choose their own paths in the global race to build digital financial infrastructure.
