
Shenzhen government launches $79m blockchain fund
The government of Shenzhen has launched a VC fund with an initial corpus of RMB500 million ($79 million) to invest in blockchain start-ups in the city.
Star Capital and Donghai, two investment funds backed by the State-owned Assets Supervision & Administration Commission (SASAC), will co-manage the fund, according to an announcement in local media. The Shenzhen Angel Investment Guidance Fund, a RMB5 billion fund launched last month, will contribute 40% of the corpus.
Investee companies will be chosen by the blockchain technology initiative of the Chinese Academy of Sciences and the Shenzhen Institute of Innovation and Development. The project plans to identify more than 100 potential portfolio companies to be incubated, with seed capital contributed by the new fund.
China’s government has made the development of blockchain of key importance for its technology investment plans, even as it clamps down on cryptocurrencies, the most well-known application of blockchain. Last year the country’s central bank banned initial coin offerings, citing concerns about fraud and the potential to create an overheated market. Earlier this year regulators also announced they would block all cryptocurrency trading websites, both foreign and domestic.
Despite the crackdown, China’s central and local governments remain interested in promoting blockchain for its potential benefits beyond cryptocurrency, such as virtual contracts and identity authentication. The technology, which allows for the creation of distributed, encrypted online databases to store transaction records smoothly, was written into the country’s 13th Five-Year Plan in 2016. Since then, it has been included in initiatives such as the Xiongan New Area, an economic zone created with the goal of creating a smart city in Hebei province.
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