China’s National Council for Social Security Funds is adopting blockchain tech for the first time to keep down transaction costs.
“Blockchain technology will be used in the social security system because of its valuable applications in the investment and management of social security funds,” Wang Zhongmin, vice chairman of the council told state newspaper China Daily.
The National Council for Social Security Funds managed around 1.9 trillion yuan ($285 billion USD) as of the end of 2015.
It comes just days after one of China’s biggest state banks, China Merchants Bank, revealed they were working with finance innovation firm R3 to build the ledger-style technology used for large-scale blockchain operations. The bank has plans to work with 60 international financial organizations to build out the system as part of a global consortium.
China has had a terse relationship with blockchain technologies in the past, though they are warming up to the idea of officially sanctioned blockchain solutions. In 2013 the central government released an official statement banning banks and payment companies from dealing in Bitcoin, the most well known blockchain currency. Bitcoin mining for personal gain has continued to flourish in China however, fueling innovation in related technologies.
Early this year the government revealed they were investigating digital currencies, opening up the possibility for a state-backed cryptocurrency, and giving the green flag to government finance groups to explore the possibilities. It appears the National Council for Social Security is the first significant government-backed institution to take advantage of the technology.