China’s central bank, the People’s Bank of China (PBoC), has said that it will certify 11 different types of financial technology (Fintech) hardware and software that are regularly being used for online payment and blockchain-related services with its new verification system, the Certification of Fintech Products.
The PBoC introduced the initial list of Fintech products that may be used during front-end and bank-end application development for online payment platforms, according to filings submitted on October 26 by the bank.
The new regulatory system has been introduced at a time when China, the world’s second largest economy by GDP, is focused on the development of improved financial infrastructure, which includes the creation of a national digital currency and a push by the nation’s president Xi Jinping to seize opportunities in blockchain technology.
The PBoC believes that China’s sovereign digital currency will enhance the efficiency of the country’s digital payments sector. The Chinese central bank says its own online currency will have better security features than WeChat Pay and the Alibaba Group-owned Alipay. The PBoC also mentioned that the new digital currency will have off-line transaction capability.
At present, there are 11 different Fintech-related products on the PBoC’s list. The institution’s certification system applies to all the products that may be used as part of digital payment technologies and infrastructure, such as point-of-sale (PoS) mobile terminals, embedded software programs, front-end applications, and various chips and security carriers.
The PBoC will reportedly award applicants a Certification of Fintech Product (CFP) if their products can clear the prototype examination and on-site inspections. After it has been issued, the certificate can be reviewed and updated, or renewed, every three years.
Related local authorities will be tasked with performing unannounced inspections on any phase of the production process in order to make sure that companies are following compliance procedures.
Organizations may stamp the certificates on their company logo, but the certification may not be used to promote products or be used for advertising purposes.
Trusted execution environment (TEE), a technology that helps with the creation of a “consortium blockchain network and verifying blockchain transactions in financial transactions use cases,” has been listed as one of the 11 Fintech products that will be certified by Chinese authorities.
In August 2018, tech giant Microsoft submitted two patent applications in order to use similar types of technologies to enhance the security and overall capacity of its blockchain-based services.
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