US lawmakers target Chinese blockchains BSN, Conflux in bill that brings tech decoupling to Web3

The initiative’s main goal is to push the adoption of blockchain in enterprise IT systems without the involvement of cryptocurrencies. While operating an enterprise-facing blockchain infrastructure service in China, BSN last year also made a major push overseas with the launch of the Spartan Network, targeting businesses outside mainland China.

The BSN Spartan Network is “an application-agnostic infrastructure” used to serve traditional IT systems, and is “completely open source”, Tim Bailey, Red Date’s vice-president of global business and operations, said in a written statement to the Post.

“We welcome agencies from the US or any government to review the source code and make their conclusions about the technology,” he said.

The BSN and Conflux both leaned on their open code and governance structures to distance their international operations from the country of their founding.

Bailey noted that the BSN Foundation, which governs the Spartan Network, is based in Singapore with members from the US, Europe and Asia. It is “completely separate” from the BSN networks in mainland China, he said, adding that Hong Kong-based Red Date is just one BSN Foundation member with a vote equal to that of any other member.

“Capitol Hill’s got that US-China drama on repeat,” Long wrote. “Sure, we are regulatory compliant in China, but that does not imply any governmental control.”

The BSN has previously raised hackles in Washington. In 2021, Yaya Fanusie, an adjunct senior fellow at the Centre for New American Security, told the congressional US-China Economic and Security Review Commission that BSN’s ambitions to develop a new internet infrastructure “will go to building a world vulnerable to the particular sensibilities of the [Chinese Communist Party]”.

“Within the next decade, every American will have sensitive, private data stored using blockchain technology,” Nunn, an Iowan Republican, said in a statement issued on Wednesday. “Our bipartisan bill ensures that the federal government is not giving China a back door to access critical national security intelligence and Americans’ private information.”

Spanberger, a Virginian Democrat, said in the release that Beijing’s investment “in a state-controlled blockchain network poses significant risks to US data security”.

“The United States must have a plan in place to keep US data out of the hands of our adversaries,” she said.

The bill directs the US Secretary of the Treasury, Secretary of State and the Director of National Intelligence to report to Congress actionable recommendations to address blockchain risks and to assess risks that include circumventing the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment messaging system and impact on countries participating in the Belt and Road Initiative.

“The call in the bill to assess what the impact and harm might be is good in general,” Fanusie told the Post. “It’s a signal for the US to be more informed about the evolution of the internet and how different parties are vying for leadership in new infrastructure.”

Observers see a bipartisan consensus today in Washington on the wisdom of adopting a more competitive approach to dealing with China to defend economic and security interests.

“While we must ensure that our trade policies are fair, the United States will also prioritise economic and national security, including protecting advanced technologies,” US Senate Majority Leader Chuck Schumer said in a press conference last month during his visit to China.

Still, he added that “we do not seek a confrontation with China”.

Additional reporting by Matt Haldane