China’s Supreme People’s Procuratorate has outlined new recommendations that could significantly transform the way cryptocurrency-related money laundering cases are investigated and prosecuted. Central to the proposals is the classification of activities such as using mixers and privacy coins as direct indicators of criminal intent, a move poised to tighten scrutiny on crypto users within the country’s legal system.
These guidelines, authored by prosecutors from Hunan Province and a law professor at Xiangtan University, highlight key challenges posed by virtual currencies’ decentralized and pseudonymous nature, which they say have outpaced existing Chinese laws. They identify a critical legal gap: while the Anti-Money Laundering Law has broadened predicate offenses, the Criminal Law restricts laundering charges to a narrow set of categories. Consequently, most crypto-related cases currently face charges for concealing criminal proceeds, which the authors describe as imprecise and insufficient for the evolving digital landscape.
The paper puts forward three notable proposals to address these issues. Firstly, it advocates for blockchain self-authentication, treating on-chain transaction data from public explorers as reliable evidence if hash values match, thereby establishing preliminary data integrity without additional verification. Secondly, it recommends shifting the burden of proof onto defendants once prosecutors submit transaction analysis reports, requiring accused parties to disprove laundering claims. Thirdly, courts would be allowed to presume laundering intent from specific behaviors, such as using crypto mixers or privacy coins, executing large off-market sales, or conducting high-value transactions through anonymous wallets lacking clear funding sources — unless the defendant provides a plausible rebuttal.
The article also tackles the difficulty of tracing illicit funds given mixers and decentralized exchanges’ complex transaction patterns, proposing adaptive rules for handling electronic data and permitting technical measures like real-time monitoring and traffic analysis under strict privacy and cybersecurity controls.
Recovering assets remains another challenge. With cryptocurrency trading banned in China, authorities currently have no legal mechanism to liquidate seized digital assets. To remedy this, the report calls for establishing a national platform dedicated to securely storing, valuing, and disposing of confiscated crypto assets through compliant channels. It suggests forming an expert committee to determine fair values based on blockchain records and international market prices. Additionally, the authors urge enhanced international cooperation through bilateral agreements and a blockchain-enabled “judicial cooperation chain” designed to trace, freeze, and recover funds transferred abroad.