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Amanda Lee

China needs to “urgently” standardise ways to recover billions of yuan worth of funds from confiscated digital assets, according to a legal expert, following last month’s revision of laws targeting money laundering using virtual currencies.
In an article published on Tuesday in the People’s Court Daily, a publication owned by the Supreme People’s Court in China, Yang Kai, a professor with the East China University of Political Science and Law, said law enforcement authorities faced difficulties in safely recuperating virtual currencies as part of criminal cases.
Yang’s comments came after the Supreme People’s Court and the Supreme People’s Procuratorate revised laws last month to include cryptocurrencies, online game coins and tipping during live streaming as channels of money laundering.
The revision would help China to bolster a crackdown on illegal activities and address cryptocurrency-related risks, a measure that would also align its practices with global standards as it faces stricter international scrutiny.
China does not recognise virtual currencies as legal tender and strictly prohibits their circulation in the market.
Digital currencies also cannot be auctioned or sold like other types of assets as it would violate Chinese laws and regulations, Yang added.
Legalising disposal of virtual currency is urgently needed
Yang Kai, East China University of Political Science and Law
This means, to liquidate digital assets, law enforcement authorities would often have to go through third party companies and overseas entities, which carries compliance risks, Yang said.
“Although the law enforcement have tried a variety of disposal methods, due to the lack of unified standards, the implementation varies greatly from place to place,” he added.
“A large amount of virtual currencies has been sealed off and cannot be converted into liquid funds, affecting the normal operation of economic activities. Therefore, legalising disposal of virtual currency is urgently needed.”
China’s judicial bodies should issue a comprehensive set of guidelines to liquidate virtual currencies “as soon as possible”, said Yang.
The guidelines should cover the legal status of virtual currencies, compliance requirements, asset disposal procedures and legal responsibilities, which would help to build a fair, transparent and secure market environment, Yang said.
The growth of virtual currencies such as bitcoin and ether used in crimes has been “phenomenal”, according to Yang.




The amount of virtual currencies involved in criminal cases rose sharply to 430.72 billion yuan (US$60.5 billion) in 2023, more than 12 times the amount in 2022, according to the Beijing-based Safeis, a Chinese tech service firm specialising in global blockchain ecosystem security.
But there are also challenges in determining the value and identifying the owners of virtual currencies, said Yang.
Yang also urged Chinese regulators to actively take part in the drafting of international rules, share experiences and coordinate with authorities from other countries because of the cross-border nature of virtual currencies.
There has been a push by the international securities watchdog, the International Organization of Securities Commissions (IOSCO), to better coordinate cryptocurrency rules among global regulators. Both mainland China and Hong Kong are members of the IOSCO.
Tracing and seizures of virtual assets, which can be illiquid, can be challenging for regulators.
The UK government introduced a bill in 2023 to help law enforcement agencies seize and freeze cryptocurrencies used for crimes.
The changes mean police would no longer be required to make an arrest before seizing assets from a suspect, while officers would also be able to transfer illicit assets into an electronic wallet controlled by law enforcement.


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Growth of virtual currencies such as bitcoin and ether used in crimes has been ‘phenomenal’, law professor says


Growth of virtual currencies such as bitcoin and ether used in crimes has been ‘phenomenal’, law professor says.


China’s money-laundering crackdown needs ‘urgent’ plan to recover illicit digital assets

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Growth of virtual currencies such as bitcoin and ether used in crimes has been ‘phenomenal’, law professor says

Growth of virtual currencies such as bitcoin and ether used in crimes has been ‘phenomenal’, law professor says