The Supreme People's Procuratorate of China has published recommendations to combat money laundering through cryptocurrencies. The agency suggests changing the approach to investigating digital crimes and updating evidence standards.
Closing Legal Loopholes
Prosecutors noted a mismatch between blockchain technology and existing laws. Currently, most cases involving crypto assets are classified as "concealment of criminal proceeds." The authors advocate for applying a stricter money laundering statute.
To achieve this, they propose implementing the principle of "one case — two checks." Investigators will be required to look for signs of money laundering when investigating any underlying crime.
New Regulations
The agency plans to simplify the handling of evidence in court. Key initiatives include:
- Blockchain self-identification: Information from public network explorers will be deemed reliable by default if the hash data matches;
- Shifting the burden of proof: If the prosecutor provides a report on transaction chain analysis, the defense will have to prove otherwise;
- Presumption of guilt: Using mixers, private coins, or selling assets at non-market prices will be sufficient grounds to establish intent for money laundering.
Seizure and Control
The procuratorate highlighted challenges in seizing cryptocurrencies. Due to the ban on digital asset transactions in China, agencies lack legal channels for their liquidation.
The authors proposed creating a government platform for storing and valuing confiscated coins. A special committee of experts will assess assets based on blockchain data and prices on international exchanges.
China also intends to initiate the creation of international protocols for tracking and freezing crypto assets as part of judicial cooperation with other countries.
It is worth noting that in March, the U.S. Treasury acknowledged that law-abiding users might use mixers to protect financial privacy in public blockchains.