Government bodies in China are implementing blockchain solutions and secure multi-party computation (MPC) within the system connecting tax authorities and banks. The initiative aims to expand small businesses’ access to financing by improving data security and operational transparency.
The State Taxation Administration (STA) and the National Financial Regulatory Administration (NFRA) updated the data exchange system between banks and tax authorities, where companies’ tax compliance is used to assess their creditworthiness. The new measures are designed to expand financing for private and small enterprises through digital technologies.
Since 2015, Chinese banks have issued more than 45 million loans to small businesses through this system, totaling 15.7 trillion yuan (~$2.2 trillion). The use of tax data helped reduce the information gap between banks and borrowers and simplify access to financing.
In the updated model, key emphasis is placed on blockchain solutions. Banks and tax authorities are encouraged to use distributed ledgers for secure data exchange and improved transparency. This is expected to shorten application processing times and reduce lending risks.
Moreover, MPC technologies are being introduced, allowing financial data to be analyzed without being disclosed. At the same time, direct data exchange channels are being upgraded, and a centralized interaction model between tax authorities and banks is being tested at the national level.
The document also tightens data protection requirements. Data sharing is only allowed with company consent, a principle of minimal necessary access is enforced, and regular security audits are introduced. Violations will result in penalties.
Another focus area is the integration of tax services into banking platforms and self-service terminals, enabling entrepreneurs to access all necessary services through a single interface.
According to regulators, the development of cooperation between financial institutions and tax authorities using blockchain solutions is expected to improve credit accessibility, strengthen the role of compliant taxpayers, and support small business growth.
This initiative aligns with China’s broader efforts to integrate blockchain solutions into its data infrastructure, as outlined in the roadmap by the National Development and Reform Commission. The document, published in January 2025, provides for nationwide implementation of distributed ledgers by 2029.
Alongside the development of blockchain infrastructure, in February 2026, the People’s Bank of China (PBOC) introduced additional restrictions on cryptocurrency transactions, classifying the use of digital assets as illegal financial activity.
