Director of Shanghai Financial Office: Blockchain development must be regulated first, Shanghai may take the lead

Shanghai's financial and legal communities may be the first to test the application of blockchain.

On February 26, the China Blockchain Application Research Center (Shanghai) was officially unveiled. Wei Yingning, former vice chairman of the China Insurance Regulatory Commission, and Zheng Yang, secretary of the Shanghai Financial Work Committee of the Communist Party of China and director of the Shanghai Financial Services Office, attended the event.

Regarding the development of blockchain, Zheng Yang called for regulations to take precedence, and said that it is possible for Shanghai's legal and financial sectors to take the lead in trial implementation. At the same time, he hopes that Shanghai's financial and technology sectors will abide by rules and conventions and promote joint innovation in finance and technology under the premise of controllable risks.

Blockchain applications await legislation

As a technological innovation in the financial field in recent years, blockchain exists on the Internet and is open to all users, enabling peer-to-peer value exchange without the intervention of a third party.

At the unveiling ceremony of the China Blockchain Application Research Center (Shanghai), Zheng Yang stated that blockchain is a highly secure, tamper-proof Internet ledger, which is particularly suitable for application areas with complicated intermediate links and excessively high intermediary costs.

Zheng Yang believes that the application evolution path of blockchain can be roughly divided into three stages:

“Version 1.0 is programmable payment, which can be applied to digital currency, payment, cross-border, micro-lending, etc.;

Version 2.0 is programmable trading, including stocks, bonds, annuities, private equity, etc.

Version 3.0 is a programmable society, which is applied to social fields such as gambling, education, and medical care. "

For the financial industry, Zheng Yang believes that blockchain has seven functions:

1. Blockchain can reduce the risk of trust;

2. Blockchain can improve the efficiency of payment transaction settlement;

3. Blockchain can reduce operating costs;

4. Blockchain can effectively prevent failures and attacks;

5. Blockchain can improve automation;

6. Blockchain can meet regulatory and audit requirements;

7. Blockchain can greatly improve the flow efficiency of data assets.

"We have established the China Blockchain Application Research Center and called for regulations to take precedence. It is possible that the Shanghai financial and legal communities can make some attempts. We will first formulate some rules to see if we can take the lead in this regard," said Zheng Yang.

Sheng Yongqiang, vice president of the Shanghai High Court, said that blockchain may bring certain changes to the legal system. First, in future commercial transactions, blockchain technology may replace traditional tools and technologies to ensure transaction security; second, blockchain has great room for development in the modernization of social governance systems and capabilities; third, applying the immutability and uniqueness of blockchain to court trials and judicial contracts may solve many problems in the law of evidence that have plagued human society for many years.

"Blockchain + Insurance" reshapes the industry's integrity foundation

Wei Yingning, former vice chairman of the China Insurance Regulatory Commission, explained the possibility of blockchain application in the insurance industry. Wei Yingning said,

"Modern insurance has added the Internet, but it still hasn't overturned the original business model. Adding blockchain may lead to a subversion. The essence of insurance is a loss sharing mechanism, and credit is the cornerstone. The audit fees of modern insurance account for 30% or even 40% of the cost. Even so, the proportion of insurance fraud is still not small. Therefore, the insurance industry pays great attention to blockchain."

Regarding the possible application scenarios of blockchain in the insurance field, Wei Yingning said that if data is placed on the blockchain and the immutability of blockchain data is utilized, contract disputes can be avoided. After an insurance accident occurs, a "smart insurance contract" can be triggered, which not only solves the difficulty of claiming, but also reduces the cost of auditing.

Regarding the future of "blockchain + insurance", Wei Yingning said that it will take arduous exploration to reshape the integrity foundation of insurance through blockchain so that people cannot lie and must be honest and trustworthy. He hopes that blockchain can play such a role as soon as possible.

At the event, the China Blockchain Application Research Center (Shanghai) was officially established. The China Blockchain Application Research Center was initiated by the Internet Finance Museum and has been established in Beijing, Zhejiang, and Shanghai. It will then build a branch in Shenzhen. The China Blockchain Application Research Center is a non-profit, neutral organization. The center invites social figures with industry policy influence to form an advisory committee, establish a board of directors, and hire a team of researchers. The center aims to accelerate the practical application and development of blockchain technology in China, while providing talent support for the development of China's blockchain.