Domain registry XYZ Inc. of Santa Monica has been accused of helping the Chinese government censor Internet domain names outside of China.

The controversy flared up when XYZ declared in an Oct. 9 application to Internet Corp. for Assigned Names and Numbers, a Marina del Rey nonprofit that administers and manages domain names, a policy to deny dot-xyz domain names banned in China to registrants outside of China. The filing was first reported by industry blog Domain Incite.

“XYZ will reserve names prohibited for registration by the Chinese government at the registry level internationally,” reads XYZ’s application. “The Gateway itself will not need to be used to block the registration of any names.”

According to the application, the “Gateway” refers to an online portal where Chinese citizens register domain names. Through the process, China wouldn’t have to block certain politically threatening domain names because they would never be registered in the first place.

Domain names that the Chinese Communist Party deems politically challenging to their rule, such as democracy.xyz, liberty.xyz, freedom.xyz, or 1989.xyz (in reference to the Tiananmen Square revolt of 1989) are reportedly blocked from being registered anywhere in the world.

XYZ Chief Executive Daniel Negari said he didn’t know which domain names were banned in China, so he wouldn’t speculate on which domain names might be blocked.

When asked whether or not he was working with the Chinese government to block domain names they deem objectionable outside of China, Negari declined to comment.

XYZ’s policy is part of an effort to become an accredited domain-name registry with the Chinese government, he said. XYZ hopes to have full accreditation of all its domain names, including dot-xyz, dot-rent and dot-college, by the first quarter of 2016, he said.

XYZ has been selling dot-xyz registrations since June of last year. At auction in 2013, the startup won a monopoly on the sale of the dot-xyz domain with an uncontested $185,000 bid.

While XYZ’s policy has earned scorn in the United States, word of the startup’s progress toward accreditation with the Chinese government has generated hundreds of thousands of domain registrations from Chinese users; activity that has been good for business, said Negari.

“We are having our highest registration days ever. We had almost 200,000 dot-xyz registrations this weekend,” he said. “Our servers have been getting slammed all weekend with registration requests.”

Negari said the policy is just an effort by XYZ to abide by local Chinese laws.

“We are applying for accreditation with the Chinese government and in doing so we have to enforce Chinese law,” he said.

Technology reporter Garrett Reim can be reached at [email protected]. Follow him on Twitter @garrettreim for the latest in L.A. tech news.