A theory article published on July 12 on the website of the Supreme People’s Procuratorate of the People’s Republic of China proposed a broad legal framework for tackling money laundering that uses virtual currencies. The piece, titled “Systematically Solving the Criminal Law Regulation Dilemma of Money Laundering Through Virtual Currency,” was written by a team from the Xiangtan People’s Procuratorate and legal scholars at Xiangtan University.
The article says current practice faces three core problems: offense classification, evidence verification, and asset recovery. On classification, it argues that Article 191 of China’s Criminal Law limits the crime of money laundering to proceeds from seven categories of upstream offenses. As a result, many cases involving the cleaning of proceeds from other crimes through virtual currency are instead handled under Article 312, the offense of concealing or disguising criminal proceeds. The authors say this has turned that offense into an overly broad catch-all.
Proposal on offense classification and prosecution
To address that issue, the article recommends a “dual review” mechanism in investigations, with investigators producing fund-flow analysis reports and prosecutors examining the substantive purpose of transfers. For standalone crypto “laundering” conduct, it says prosecutors should add money laundering charges and adjust performance assessment systems to raise the rate of independently filed money laundering cases.
Blockchain records and presumptions of intent
On proof, the article says offenders often use mixers, privacy coins, and decentralized exchanges, or DEXs, to split funds across layers and move assets across chains. That, it says, creates difficulties in collecting evidence, authenticating it, and proving the case.
The authors propose a new evidentiary approach built around “blockchain data self-authentication.” Under the article’s proposal, if on-chain transaction records can be verified through a public blockchain explorer and the hash values match, the records could be preliminarily recognized as authentic, with the burden then shifting to the party challenging them.
The article also calls for a presumption of knowing intent. It says suspects could be directly presumed to have money laundering intent if they used mixers or privacy coins, or rapidly sold large amounts of virtual currency at unreasonable prices.
National disposal platform and cross-border coordination
On asset recovery, the article says China’s financial regulators maintain a ban on the circulation of virtual currencies. In practice, that leaves law enforcement agencies with no compliant liquidation channel after seizing crypto, while also creating problems in private key custody and valuation standards.
The proposed response is a combined domestic and international structure. At the national level, the article calls for formal disposal procedures for case-related virtual currencies and a national virtual currency custody and disposal platform. It says assets could be liquidated through compliant routes such as targeted auctions or negotiated transfers, while a dynamic valuation expert committee could be set up to support fair pricing.
For international coordination, the article urges China to sign judicial assistance agreements covering virtual currency crimes and support a blockchain-based “judicial cooperation chain” to share suspicious address alerts and freezing orders across borders.