Public blockchain startup Conflux will set up a new data management system for the provincial government of Hunan and set up an innovation and training lab at the province.

Why it matters: This is the second official endorsement that Conflux has received from a government entity—an extremely rare feat for a public blockchain startup—after it struck a deal with the local Shanghai government in December.

  • Public blockchain applications are usually frowned upon in China. Their decentralized nature does not allow for information to be controlled.
  • Conflux has avoided the ire of regulators, and even invited their support, by steering clear of taboo activities like initial coin offerings (ICOs).

“It is a great opportunity to demonstrate to the wider society that blockchain is actually useful and not just speculation.”

—Conflux founder Fan Long to TechNode

Details: Conflux will “revamp” the provincial government’s information architecture using its blockchain solutions and create a blockchain research and training facility at Hunan University, the startup’s founder Fan Long told TechNode.

  • The Beijing-based company has set up an entity in Hunan, which it co-owns with local partners, that will create a new blockchain-based low-level architecture for storing government data.
  • The system will digitize government data and integrate it with the Conflux architecture, which will enable easier and secure data sharing between administrative agencies, according to Long.
  • The project is worth around $10 million, he added.
  • Conflux has set up a government-funded lab at the province’s top university and hired team of 15 “key people,” Long said.
  • “If the Covid-19 situation is getting better, it will be fully operational by the end of the year,” he said.

Context: After Xi Jinping encouraged the adoption of blockchain last autumn, local governments have jumped on the bandwagon.

  • The Beijing municipal government announced in July an ambitious plan to integrate the technology in its governance, with applications in customs, cargo, finance, real estate, and more.
  • Conflux’s December deal with the Shanghai government was for a 10,000 square meter research lab in the city.
  • The startup reportedly received $35 million in funding in a private token sale in 2018, from investors including Sequoia China and Huobi Capital.
  • It has not and will not try to raise money through an ICO, the company has said. ICOs are a popular way of fundraising in the blockchain world, but were banned in China in 2017.
  • “If you want to go beyond speculation, you have to be compliant,” Long said.

READ MORE: Beijing unveils plan for blockchain-based government

Correction: An earlier version of this article incorrectly stated that Fan Long was the CEO of Conflux.

Eliza was TechNode's blockchain and fintech reporter until July 2021, when she moved to CoinDesk to cover crypto in Asia. Get in touch with her via email or Twitter.