Chinese prosecutors are advocating for a more proactive and targeted strategy to combat cryptocurrency-related money laundering, according to a recent article published on the official website of China's Supreme People’s Procuratorate (SPP).
"While virtual currencies improve transaction efficiency, their decentralized, anonymous, and cross-border circulation characteristics also provide unprecedented convenience for money laundering crimes," the SPP article states.
The authors—two SPP officials and a professor from Xiangtan University—argue that China’s current legal framework has not kept pace with the rapid evolution of digital asset technologies, hindering investigators’ ability to trace illicit flows, collect evidence, and recover stolen assets.
They specifically highlight the challenges posed by crypto mixers, privacy-focused coins, and decentralized exchanges, noting that traditional investigative tools often fail to track transactions through these channels.
The paper proposes a significant shift in evidentiary standards: individuals who use mixers or privacy coins should be presumed to have intent to launder money. Additional red flags include rapidly moving large sums of cryptocurrency under suspicious conditions or conducting frequent, high-value transactions via unverified anonymous wallets.
Although not explicitly named in the report, Tornado Cash is widely regarded as the most prominent crypto mixer, while Monero and Zcash are leading examples of privacy coins. These tools have drawn intense regulatory scrutiny globally. In the U.S., the Treasury Department recently acknowledged in a 32-page report that mixers can serve legitimate privacy purposes—a notable softening from its 2022 sanctions against Tornado Cash.
China maintains a strict stance on cryptocurrency, effectively banning trading and related services. The People’s Bank of China (PBoC) reaffirmed last year that digital asset operations remain illegal within the country, even as authorities intensify prosecutions of crypto-linked financial crimes.
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