TLDR
- Chinese prosecutors proposed new rules for crypto money laundering cases.
- Crypto mixers and privacy coins could be treated as laundering red flags.
- Suspects may need “reasonable counter-evidence” to explain private transfers.
- Blockchain records could be accepted as self-authenticating evidence.
- China may create a national platform to manage and sell seized crypto.
Chinese prosecutors and legal scholars have proposed new rules for handling crypto money laundering cases, including treating the use of mixers, privacy coins and anonymous wallets as possible signs of criminal intent when suspects cannot provide “reasonable counter-evidence.”
Prosecutors Seek New Crypto Money Laundering Rules
An opinion article published in the People’s Procuratorate Daily, the official newspaper linked to China’s Supreme People’s Procuratorate, outlined a framework for investigating and prosecuting virtual currency money laundering cases. The article was written by two district prosecutors in Hunan province and a law professor from Xiangtan University.
The proposal does not carry legal force, but it points to how some prosecutors want China’s courts and investigators to handle crypto-related laundering cases. The authors said virtual currencies have improved transaction efficiency, but their anonymity, cross-border movement and decentralized structure have also created enforcement problems.
The article said China’s current legal framework leaves gaps between the revised Anti-Money Laundering Law and Article 191 of the Criminal Law. The AML law no longer limits predicate offenses, while the criminal money laundering offense still applies to seven specified upstream crimes.
Because of that gap, prosecutors often use the broader charge of concealing or disguising criminal proceeds in crypto cases. The authors warned that this charge has become an overstretched tool and argued that investigators should identify separate laundering conduct more clearly.
Mixers and Privacy Coins Could Face Higher Scrutiny
The article proposed that courts could presume criminal intent when suspects use tools designed to hide transaction trails, unless they provide “reasonable counter-evidence.” Those tools include crypto mixers, privacy coins, decentralized exchanges and anonymous wallets with no clear link to real-world identities.
The authors also cited large crypto sales at “obviously unreasonable” prices and high-frequency transfers through anonymous wallets as behavior that may support money laundering allegations. These claims would still require judicial review, but the proposal would shift more pressure onto suspects to explain their transactions.
The article called for a “double investigation of one case” rule. Under that approach, investigators would examine both the underlying crime and any laundering activity tied to the movement of crypto assets.
Prosecutors also recommended that investigators prepare virtual currency fund flow reports and assess whether separate money laundering charges should be added to predicate offenses. They said prosecutors should step into complex cases earlier and focus on the purpose of crypto transfers, not only the original crime.
Blockchain Evidence and Seized Crypto Platform Proposed
The proposal called for publicly verifiable blockchain records to be treated as self-authenticating electronic evidence when transaction hashes remain consistent. That would allow courts to rely more directly on on-chain records that can be checked through public block explorers.
Reports from compliant blockchain analytics firms could also be accepted as expert evidence, subject to review of the tools, data and methods used. The authors said fund flow maps, wallet clustering and transaction tracing reports may help form a coherent evidence chain, even when investigators cannot trace every coin to its source.
The article also addressed China’s seized crypto problem. Since China bans crypto trading, authorities that confiscate tokens have no clear domestic channel to sell them, leaving large amounts of digital assets difficult to manage.
The authors proposed a national platform to custody, value and sell seized crypto through compliant channels. They also called for expert committees to price assets using on-chain data and global exchange prices.
China banned crypto trading and mining in 2021, but crypto-related money laundering remains active. The latest proposal seeks stricter evidence rules, stronger blockchain tracing and a formal asset disposal system as prosecutors look for clearer tools to handle virtual currency crime cases.
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