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China's BSN Onboards EY for Ethereum Compliance Tools
The new compliance services could further boost China’s efforts in the blockchain race against the U.S.
By David Pan
Updated Sep 14, 2021, 12:07 p.m. Published Feb 5, 2021, 3:14 p.m.
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The Blockchain-based Service Network (BSN), the blockchain infrastructure provider backed by the Chinese government, plans to offer blockchain analytics and financial auditing services for Ethereum developers in its network through a new partnership with Big Four auditor Ernst & Young (EY).
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The London-based accounting firm will provide BSN’s Ethereum users in China with two compliance products – EY OpsChain and EY Blockchain Analyzer – according to a press statement shared with CoinDesk.
EY OpsChain will integrate procurement and traceability functions into BSN, where its users on Ethereum can run procurement activities using tokens and smart contracts. The EY Blockchain Analyzer will offer blockchain analytics and financial statement audits to the users.
The new compliance services could further boost China’s efforts in the blockchain race against the U.S. More BSN’s users will be able to build and run blockchain projects in the network without worrying about compliance issues.
“China is one of the largest markets for blockchain technology in the world, and, while EY teams have been operating there for several years, this is the EY organization’s first big step in deploying the EY blockchain platform in a scalable manner,” Paul Brody, global blockchain head at EY, said in the statement.
BSN was co-founded by state-owned telecom giant China Mobile, UnionPay and fintech startup Red Date in April 2020. The project aims to provide cloud services and a standardized development environment for blockchain developers.
BSN is split into two versions: a domestic version, where only permissioned blockchains are available, and a global version, which allows developers around the world to build or run decentralized applications (dapps) on public chains adapted to its development environment. BSN “localized” Ethereum in its domestic version by making it an open permissioned blockchain, which could be controlled by an enterprise.
Read more: China Aims to Be the World’s Dominant Blockchain Power – With Help From Google, Amazon and Microsoft
“Initial availability will focus on the planned open permissioned version of Ethereum in China with a future extension to a controlled access version of the Ethereum network across the globe when it becomes available,” the statement said.
The move came after New York-based Ethereum hub ConsenSys teamed up with BSN in January. That partnership aims to bring ConsenSys’ enterprise ledger, Quorum, to China’s nationwide blockchain project.
BSN was co-founded by state-owned telecom giant China Mobile, UnionPay and fintech startup Red Date in April 2020. The project aims to provide cloud services and a standardized development environment for blockchain developers.
EY has also joined the Financial Blockchain Shenzhen Consortium (FISCO), a Chinese non-profit organization dedicated to promoting the use of blockchain for financial applications. The accounting firm will use FISCO’s platform to make its compliance services available to more users in China and other Asia-Pacific regions, according to the statement.
“By offering both FISCO BCOS and Ethereum, EY professionals will serve clients within China and across the Asia-Pacific region and connect those users to the global blockchain,” Brody said. “I see this as a key step forward in connecting the world’s largest economies through blockchain technology.”
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The Context: The Executive Director of the President’s Council for Advisors for Digital Assets sat down for an interview with CoinDesk where he said the recent World Economic Forum in Davos served as a stage for the Trump administration to signal its commitment to normalizing digital assets as a permanent asset class. He said:
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- Consumers benefit from this competition, positioning the current administration as firmly on the side of technological innovation.
- The President renewed a pledge at the event to establish the United States as the undisputed "crypto capital of the world".
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- The Senate Banking Committee has postponed its markup, requiring further mediation on issues like stablecoin rewards and ethics.
- Witt expressed confidence that despite these delays, the legislation will eventually be reconciled and brought to the Senate floor.
Reading Between the Lines: Stablecoins are acting as a "gateway drug" for global business leaders who are beginning to grasp the technology's potential—and its threat.
- Witt observed a cycle where traditional players move from a lack of understanding to fear, and finally to incorporating crypto into their own product offerings.
- While some Senate Republicans worry about stablecoins causing deposit flight from community banks, Witt believes a "smooth glide path" into these future technologies is possible with patience and cooperation.
- “Consumers win when there’s choice,” he said, while also acknowledging concerns from Senate Republicans about community banks and financial stability. The administration, he suggested, sees convergence between crypto and traditional finance as inevitable but wants the transition to be smooth rather than destabilizing to all parties.
- U.S. regulators intend to lead the global regulatory conversation, even if the domestic legislative process results in imperfect "directionally accurate" rules.
What Comes Next: Once the primary market structure bill passes, the administration plans to pivot toward a major crypto tax package.
- Witt suggested there is still a window of opportunity to pass additional digital asset legislation this year before midterms dominate the congressional calendar.
- The administration is also monitoring "developing situations" regarding digital assets potentially seized in national security actions abroad, such as in Venezuela.
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