China Crypto News – China’s Supreme Court Intensifies Scrutiny of Cryptocurrency Transactions
China Crypto News – China’s Supreme People’s Court has issued a new judicial interpretation that tightens scrutiny on the use of virtual assets in money laundering activities. This move is expected to elevate the legal risks for cryptocurrency traders on the mainland. The new guidelines, released on August 19, highlight that using virtual assets to transfer or convert criminal proceeds is a violation of Chinese criminal law.
Legal Risks Amplified for Mainland Cryptocurrency Investors
According to the judicial interpretation, the legal risks associated with trading cryptocurrencies have intensified. Shao Shiwei, a lawyer at Shanghai-based Mankun Law Firm, emphasized on WeChat that the updated guidelines will make it increasingly challenging for USDT merchants and ordinary individuals to trade cryptocurrencies without encountering substantial legal risks. USDT, a prominent stablecoin pegged to the US dollar, is a major player in the crypto market. Shao noted that ordinary investors could face prosecution if they unknowingly handle proceeds from criminal activities during virtual asset transactions.
New Interpretation Targets Evolving Money Laundering Tactics
The judicial interpretation comes as a response to the evolving methods of money laundering, including the use of cryptocurrencies and game tokens, which have become more sophisticated in the digital age. Chen Xueyong, deputy chief judge of the Supreme People’s Court’s No. 3 Criminal Adjudication Tribunal, stated that this is the first time virtual assets have been explicitly mentioned in an official criminal law interpretation. This development underscores the urgency of updating China’s Anti-Money-Laundering (AML) Law, with a proposed amendment expected to sharpen focus on prosecuting cryptocurrency-related asset transfers abroad.
Guidance for Courts and Continued Market Participation
Liu Honglin, founder of Mankun Law Firm, explained that the new interpretation aims to guide courts in handling cases involving virtual asset-based money laundering. However, it does not equate cryptocurrency trading with money laundering nor does it alter mainland China’s cryptocurrency policies. Despite the ban on crypto-related activities like mining and initial coin offerings on the mainland, Chinese investors remain active and influential in global cryptocurrency markets. According to a March survey by Chainalysis, Chinese cryptocurrency investors contributed $1.15 billion in 2023, placing them fourth globally, behind investors in the United States, the United Kingdom, and Vietnam.
Regulatory Shifts and Hong Kong’s Role
While Beijing has enforced strict regulations on the mainland, allowing Hong Kong to regulate and support virtual asset businesses, the shift highlights the ongoing adaptation of financial regulations in response to emerging technologies and financial practices. The international community and crypto investors should closely monitor these developments as China continues to refine its approach to combating financial crimes involving digital assets.
FAQ: China’s New Regulations on Virtual Assets and Cryptocurrency Trading
What recent action has China taken regarding virtual assets and money laundering?
China’s highest court, the Supreme People’s Court, has issued a new judicial interpretation that increases scrutiny on the use of virtual assets in money laundering activities. This move is part of a broader effort to address the use of cryptocurrencies and game tokens in illegal financial activities.
How does the new judicial interpretation affect cryptocurrency traders in China?
The interpretation raises the legal risks for cryptocurrency traders in mainland China. Traders and investors could face legal consequences if they unknowingly become involved in transactions related to criminal activities. This increased risk is particularly relevant for those dealing with stablecoins like Tether’s USDT.
What are the key metrics and guidelines mentioned in the new judicial interpretation?
The judicial interpretation highlights the use of virtual assets for transferring or converting criminal proceeds as a method of money laundering. It emphasizes that virtual assets, including cryptocurrencies, are now explicitly mentioned in criminal law, marking a significant step towards addressing money laundering in the digital age.
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