China's Supreme People's Procuratorate has introduced a new package of recommendations aimed at combating money laundering using cryptocurrencies. This move is not just another regulation, but a fundamental attempt to reshape the legal framework for digital assets, which authorities believe lags behind technological realities. The main goal is to eliminate legal loopholes that allow criminals to evade responsibility.
New Doctrine: "One Case, Two Checks"
The key innovation is a shift from classifying cryptocurrency crimes as "concealment of criminal proceeds" to a stricter article on money laundering. Prosecutors propose implementing a principle where each episode of the underlying crime is automatically checked for signs of money laundering. This significantly expands the scope of liability for individuals involved in cases related to digital assets.
Evidence Base: A Revolution in Judicial Practice
The recommendations contain three key changes that will radically simplify the prosecution's work:
- Blockchain Self-Identification: data from public blockchain explorers will be deemed reliable by default if the hash values match. This reduces the burden on experts and speeds up the process.
- Shift in Burden of Proof: if the prosecutor provides a transaction chain analysis report, the defense will have to prove its invalidity. This creates a presumption of guilt regarding complex financial schemes.
- Presumption of Guilt: the mere use of mixers, privacy coins (e.g., Monero), or selling assets at prices significantly deviating from market rates will become sufficient grounds for establishing intent to launder money. This is a red line for all who value anonymity.
Confiscation Issue: China Creates a State Crypto Depository
A current problem is the lack of legal channels for disposing of confiscated crypto assets due to the general ban on their circulation in the PRC. The Procuratorate proposes creating a state platform for storing and evaluating seized coins. The evaluation will be conducted by a special committee of experts using blockchain data and quotes from international exchanges. This will not only solve the storage problem but also create a precedent for legal state interaction with the crypto market.
On the international stage, Beijing intends to initiate the creation of global protocols for tracking and freezing digital assets within the framework of judicial cooperation. This is a signal to the world: China does not intend to stay on the sidelines in shaping the rules of the game in the crypto space.
My Analysis: This step is a logical continuation of Beijing's tough line. If using mixers was previously a "gray area," it is now effectively equated to a criminal offense. For international users, this means that anonymous tools are becoming toxic not only in the US but also in China. The market should prepare for increased pressure on privacy in public blockchains.