China’s Supreme People’s Procuratorate has issued a series of recommendations that could redefine the country’s legal stance on crypto-based money laundering. By targeting cryptocurrency mixers and privacy-focused digital currencies, the proposals aim to better identify and prosecute illicit financial activities.
How Are Prosecutors Responding?
The suggestions are outlined in the Procuratorial Daily, crafted by two prosecutors from Hunan’s Yuhu District and a Xiangtan University law professor. They argue that the decentralized and pseudonymous nature of cryptocurrencies creates gaps in current legal frameworks, making it tough to clearly define money laundering and recover illegal profits.
Despite updates to China’s Anti-Money Laundering Law, Article 191 of the Criminal Law limits money laundering charges to a few categories, pushing most crypto-related cases under Article 312. This article deals broadly with concealing unlawful earnings, a position the authors believe is too lenient and vague.
To tackle these issues, they urge a broader application of anti-money laundering laws to cryptocurrencies, advocating a “one case, two checks” standard to explore potential laundering in significant criminal investigations.
What Are the Focal Points in the Paper?
One prominent idea is that courts should preliminarily accept blockchain records from public explorers, validated by hash values, to be considered reliable. In an innovative twist, the paper also recommends shifting the burden of evidence: once the state provides a transaction analysis, defendants must dispute its legitimacy.
The authors go further, proposing that courts assume criminal intent in the presence of specific actions, such as using mixers or privacy coins, executing large trades at unconventional prices, or moving vast sums from unknown wallets. Defendants would need to provide plausible explanations to counter these suspicions.
- Use of crypto mixers and privacy tokens could be treated as evidence of wrongdoing.
- Suggestions include a national hub for handling confiscated digital currencies.
- Advocacy for cross-border cooperation to enhance tracking and freezing of overseas assets.
These proposals, while still non-binding, offer a glimpse into potential policy shifts for Chinese courts regarding digital currencies. A pressing issue is underscored by statistics: in 2025, Chinese networks dealt with $16.15 billion in laundering, comprising 20% of global activity, while over 3,000 people faced charges for cryptocurrency laundering in 2024.
