China’s Supreme People’s Procuratorate has released recommendations aimed at overhauling the investigation and prosecution of cryptocurrency-related money laundering, including a proposal to classify the use of mixers and privacy coins as evidence of criminal intent.
The paper, published in the official Procuratorial Daily, was authored by two prosecutors from Hunan Province’s Yuhu District and an associate law professor at Xiangtan University. The authors highlight a critical gap in China’s legal framework caused by the decentralized, pseudonymous, and cross-border nature of virtual currencies. They identify three key challenges: defining applicable offenses, collecting evidentiary data, and recovering illicit assets.
A central issue is the inconsistency between existing statutes. While China’s Anti-Money Laundering Law has relaxed restrictions on qualifying predicate offenses, Article 191 of the Criminal Law still caps money laundering charges to seven predefined categories. Consequently, most cryptocurrency cases are prosecuted under Article 312, which addresses concealing criminal proceeds—a broad offense the authors deem inadequate for addressing crypto-specific complexities.
Legal Framework Modernization in China’s Crypto Cases
The recommendations outline three core proposals. First, the paper advocates for blockchain self-authentication, which would accept on-chain transaction records from public block explorers as reliable evidence if their cryptographic hash values match, establishing data integrity. Second, it proposes shifting the burden of proof: once prosecutors submit a transaction chain analysis, defendants would be required to challenge its validity. Third, the rule would permit courts to infer money laundering intent from specific behaviors alone, such as using mixers or privacy coins, conducting off-market asset sales, or engaging in high-value anonymous wallet transactions—unless the defendant provides a reasonable explanation.
The authors also address the technical challenges of tracing cryptocurrency flows, noting that mixers, privacy coins, and decentralized exchanges enable complex multi-layered transfers that traditional investigative tools struggle to track. They recommend adopting adaptive electronic data rules, tiered evidentiary standards, and expanded authorization for monitoring and traffic analysis techniques, balanced against privacy and cybersecurity safeguards.
Asset recovery poses another hurdle. Since cryptocurrency trading remains banned in China, authorities currently lack legal mechanisms to liquidate seized digital assets. The paper proposes creating a national platform to store, assess, and dispose of confiscated crypto holdings via compliant channels, along with an expert committee to determine asset values using blockchain analytics and global exchange benchmarks.
Additionally, the authors call for bilateral and multilateral legal frameworks, including a blockchain-based “judicial cooperation chain,” to assist in tracing and freezing funds transferred internationally. While these proposals lack immediate legal authority, they signal a potential shift in China’s judicial approach to crypto-related financial crimes. The recommendations emerge amid a surge in crypto laundering activity, with Chinese networks processing $16.15 billion in 2025—approximately 20% of global totals, according to Chainalysis. Prosecutors prosecuted over 3,000 individuals in crypto money laundering cases in 2024 alone, underscoring the scale of enforcement challenges ahead.
