China prepares tougher rules to combat crypto money laundering

Key points:

• Chinese prosecutors want courts to presume criminal intent in money laundering cases involving crypto mixers, privacy coins, and anonymous wallets.
• They also propose recognizing blockchain records and blockchain analytics reports as admissible evidence in court.

China is considering a tougher approach to combating cryptocurrency-based money laundering. An article published in Procuratorate Daily, the official newspaper of the Supreme People's Procuratorate, outlines proposals to strengthen how these cases are investigated.

While the article has no legal force, it offers insight into the direction China's prosecution system may be heading. The discussion comes as more than 3,000 people were prosecuted for crypto-related money laundering offenses in China during 2024 alone.

Under current Chinese law, only a limited number of underlying offenses qualify as money laundering. As a result, prosecutors often rely on broader charges related to concealing criminal proceeds. According to the authors, this workaround has become increasingly ineffective and needs to be replaced with a more targeted framework.

Using Mixers Could Be Treated as Evidence of Criminal Intent

One of the most significant proposals concerns the standard of proof. The authors argue that courts should be allowed to presume intent to launder money when a suspect uses tools designed to hide transaction trails, such as crypto mixers or privacy coins.

The same presumption could apply if someone sells large amounts of cryptocurrency at obviously below-market prices or conducts frequent high-value transfers through anonymous wallets that cannot be linked to their identity. In such cases, the burden would shift to the suspect to provide credible evidence disproving criminal intent.

China May Create a State Platform to Sell Seized Crypto

The article also addresses another long-standing issue: what to do with confiscated cryptocurrency. Since China banned crypto trading in 2021, authorities have had no clear legal mechanism for disposing of seized digital assets.

The authors propose establishing a state-run platform to custody and liquidate confiscated cryptocurrency through regulated auctions. They also recommend creating an expert committee to value digital assets and expanding international cooperation to trace and recover crypto transferred overseas.

In practice, local governments have already been selling seized cryptocurrency through private firms operating outside mainland China. Reuters reported last year that this unofficial process has been used for some time, and the proposed framework would replace it with a formal legal mechanism.

Despite banning cryptocurrency trading and mining, China remains one of the world's largest hubs for crypto-related money laundering. According to Chainalysis, Chinese-language laundering networks processed approximately $16 billion in illicit cryptocurrency transactions in 2025—around 20% of the global total. Analysts attribute this in part to China's strict capital controls, which create demand for moving wealth offshore and provide liquidity that international criminal networks can exploit.