China has formally implemented a law governing cryptographic password management as part of its pre-release plans for its central bank digital currency (CBDC).

As English-language news media outlet China Money Network reported on Jan. 1, the latest regulations have become legally binding following their unveiling in October last year.

Crypto security paves way for CBDC

As Cointelegraph reported, the Standing Committee of the 13th National People's Congress in China passed the crypto law on Oct. 26. It divides passwords at large into three distinct categories — passwords, common passwords, and commercial passwords — and aims to facilitate China’s transition to blockchain technology: 

“In order to prevent data from being tampered with, it is necessary to protect each data with a password. The development of blockchain technology can not be separated from the progress of cryptography technology,” China Money Network wrote referencing a report from Japanese media outlet Japan Economic News.

The central bank’s tests are ongoing

China has not yet set a formal release date for its CBDC, which will be the first state-backed cryptocurrency on the world stage. 

Late last year, the People’s Bank of China (PBoC) confirmed it would start live testing of the currency with select banks before 2020 began.

Beijing’s sudden public praise of blockchain more broadly sparked a wave of enthusiasm that ricocheted across cryptocurrency markets. Bitcoin (BTC) rose, while China-based altcoins delivered considerable growth over a short period. 

At the same time, state-controlled media stressed that the endorsement was not tantamount to authorities slackening the strict ban on cryptocurrency trading in place since September 2017.

Cointelegraph published a retrospective on China’s cryptocurrency policy this weekend.