China's Supreme People's Procuratorate has released a new package of guidelines aimed at strengthening the fight against money laundering through cryptocurrencies. The agency proposes a fundamental overhaul of approaches to investigating digital crimes and updating standards of evidence in courts. This is a step towards closing legal loopholes that, according to prosecutors, allow criminals to evade responsibility.

Tightening Legal Classification

Prosecutors emphasize the mismatch between blockchain technology and current legislation. Currently, most cases involving crypto assets are classified under a less stringent article — "concealment of criminal proceeds." The authors of the guidelines insist on applying a stricter article on money laundering. To this end, they propose implementing the principle of "one case, two reviews," requiring investigators to look for signs of money laundering when investigating any primary crime.

New Rules of Evidence

The main initiatives are aimed at simplifying the handling of evidence in court:

  • Blockchain self-identification: information from public network explorers will be considered reliable by default if the hash data matches.
  • Shifting the burden of proof: if the prosecutor provides a transaction chain analysis report, the defense will have to prove the contrary.
  • Presumption of guilt: the use of mixers, privacy coins, or the sale of assets at non-market prices will be sufficient grounds for establishing intent to launder money.

Confiscation and International Cooperation

The Procuratorate also pointed out difficulties in seizing cryptocurrencies. Due to the current ban on the circulation of digital assets in China, agencies have no legal channels for their disposal. As a solution, it is proposed to create a state platform for storing and appraising confiscated coins. Appraisal will be handled by a special committee of experts based on blockchain data and prices from international exchanges.

In addition to domestic measures, China intends to initiate the creation of international protocols for tracking and freezing crypto assets within the framework of judicial cooperation with other countries.

My analysis: This move by Beijing is a logical continuation of the tough line on cryptocurrency control. If the proposals are adopted, China will effectively recognize the use of mixers and privacy coins as a criminal offense, setting a precedent for other countries. However, in practice, implementing such measures will require enormous resources and international coordination, leaving their effectiveness in question for now.