China seeks stronger rules for virtual currency money laundering
Proposed reforms would introduce new evidence standards, improve cross-border cooperation and establish a national framework for handling seized virtual assets.
China has proposed a series of legal and procedural reforms to improve the investigation and prosecution of virtual currency-related money laundering cases. Prosecutors argue that current legislation creates difficulties in determining criminal liability, collecting digital evidence and recovering illicit assets, leaving gaps in the country’s enforcement framework.
The proposals recommend issuing dedicated judicial guidance, expanding training in blockchain analysis, and requiring investigators to examine both the underlying criminal offence and any related laundering activity. Greater use of blockchain transaction reports and earlier prosecutorial involvement in complex investigations are also intended to improve case handling.
Prosecutors have also suggested updating evidence rules to recognise verifiable blockchain transaction records and qualified blockchain analytics reports, subject to judicial review. Courts could rely more heavily on corroborating circumstantial evidence in cases involving mixers, privacy-focused cryptocurrencies or anonymous wallets where direct tracing is difficult.
The recommendations also call for a national framework to manage seized virtual assets through standardised custody, valuation and disposal procedures, alongside stronger international cooperation on cross-border investigations and asset recovery.
Why does it matter?
The move signals that China is refining its legal approach to virtual currency crime by focusing on investigative procedures and evidentiary standards rather than introducing an outright policy shift. Clearer rules for handling blockchain evidence and seized digital assets could strengthen enforcement while providing greater consistency in complex financial crime cases.
The recommendations also reflect a broader global trend towards equipping law enforcement with specialised tools to investigate illicit cryptocurrency activity. If adopted, the reforms could influence how other jurisdictions develop legal frameworks for digital asset investigations, cross-border cooperation and asset recovery.
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