Blockchain in China is entering into a “government-led mode,” according to certain commentators. The government is increasingly investing into the technology with Hangzhou announcing a $1.6 billion blockchain fund, followed by Shenzhen announcing its first venture capital fund of RMB 500 million and, finally, Fujian province offering funding supports to blockchain startups, all in the same month.

During this year’s GMIC in Beijing, TechNode talked Danny Deng, Chairman of Tai Cloud and the head of the China Blockchain Delegation at last year’s World Economic Forum in Davos. Deng shared his views on the future of digital identity, and his views on why the Chinese government likes blockchain but dislikes cryptocurrencies.

“China is quite conservative for all kinds of investment and trading not related to the real industry,” said Deng. According to him, the government is realistic but at the same time curious to find out what kind of benefits blockchain can offer to them. Another side is that China is developing its own system for its own social environment in which bitcoin and Ethereum that guarantee anonymity have no place.

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