Virtual Currency Money Laundering Officially Upgraded to Criminal Offense, National Judicial Level Initiates Comprehensive Crackdown

On March 9, 2026, Zhang Jun, President of the Supreme People’s Court, explicitly stated at the Fourth Session of the 14th National People’s Congress that efforts must be made to punish new types of crimes such as money laundering and capital flight involving virtual currencies according to the law, and to prevent illegal cross-border capital transfers. This statement marks a shift from the central bank’s regulatory bans to the highest judicial authority’s crackdown, indicating that the country’s governance system for virtual currencies has upgraded from “restrictions” to “severe punishment.”

In 2025, the Supreme People’s Court handled over 31,900 cases, with courts at all levels adjudicating and concluding over 36 million cases. As 2026 begins the “14th Five-Year Plan” period, the national public security and economic investigation departments have made combating illegal financial crimes involving virtual currencies a core task. This means judicial and law enforcement agencies are working together, and efforts against illegal activities involving virtual currencies have entered a normalized, high-pressure phase.

From Policy Bans to Judicial Crackdowns: Accelerating the Upgrade of Virtual Currency Governance

Virtual currencies are not “lawless zones.” China’s stance on illegal activities related to virtual currencies has always been clear and firm, with layered regulations and crackdowns forming a comprehensive defense.

Clear Policy Position

The People’s Bank of China and other departments have repeatedly emphasized that virtual currencies do not have legal tender status. Any exchange, transaction, or intermediary service involving virtual currencies is considered illegal financial activity and must be shut down according to law. This clarification eliminates any room for “gray area” operations.

Full-Chain Law Enforcement Actions

Special campaigns nationwide have covered the entire chain of virtual currency money laundering—from fund transfers, account management, platform investigations to overseas tracing. No link is left unchecked. Criminals once relied on the “anonymity” of virtual currencies, but reality proves that the country’s regulatory network has no blind spots.

Judicial Deterrence Enhancement

The Supreme Court has repeatedly highlighted virtual currency money laundering in work reports, and many local courts have issued rulings on related cases, establishing a judicial trend of “conviction with evidence and strict sentencing.” This means law enforcement is stricter, judicial judgments are more precise, and coordination is stronger—any illegal activities involving virtual currencies will face severe legal consequences.

Constant Innovation in Virtual Currency Money Laundering Methods, Crime Risks Far Exceed Traditional Models

Under high-pressure regulation, virtual currency criminals have not stopped but instead continue to innovate, showing characteristics of professionalism, chain integration, and cross-border operations. These new methods are more covert and pose broader risks.

Concealment: Decentralized Tools Become Money Laundering Aids

From early simple virtual currency transfers, criminals have evolved to complex “decentralized exchanges + mixers + cross-chain bridges” money laundering models. These tools do not require real-name verification, obfuscate fund trails through mixing, and split transfers across chains, making it difficult for regulators to trace sources and destinations. The difficulty of crackdown has increased exponentially.

Deception: New Concepts as Cover

Criminals now disguise money laundering with new concepts like NFTs, GameFi, RWA, etc. Under the guise of “asset on-chain” or “high-yield investments,” they hide the true purpose. Especially with tokenized RWA, these are easily transformed into tools for capital flight, with high deception potential.

Spread: Ordinary Users Become Co-Conspirators

The most dangerous change is that, beyond laundering funds themselves, criminals now develop schemes like “running points,” “proxy investments,” and “virtual currency collection” to involve ordinary users. Offering high commissions, they induce users to collect virtual currencies or transfer funds, unknowingly assisting illegal money laundering and becoming co-conspirators.

Multi-Dimensional Social Harm

Money laundering via virtual currencies has extended beyond industry boundaries, affecting the entire financial system and social stability. On one hand, illicit funds laundered through virtual currencies often flow overseas, making tracing difficult and recovery low, with assets of involved parties often irretrievable. On the other hand, virtual currencies have become tools for upstream crimes like telecom fraud, online gambling, and illegal fundraising, providing convenient channels for various illegal activities and amplifying social harm. Additionally, evading foreign exchange controls and illegal cross-border asset transfers directly undermine the country’s normal financial management system, threatening financial security and economic stability.

Virtual Currency Risks Are No Longer Ignorable; Everyone Must Guard the Defense Line

In the face of intensified judicial crackdowns and constantly evolving criminal tactics, individuals and institutions must remain vigilant. Money laundering involving virtual currencies is no longer a “gray area” but a clear criminal offense, with risks directly affecting every participant.

First Line of Defense: Firmly Avoid Illegal Virtual Currency Activities

Refrain from engaging in virtual currency and fiat currency exchanges, do not accept or pay virtual currencies for others, and avoid suspicious activities like “running points” or “arbitrage.” These seemingly quick-money opportunities are actually traps for crime.

Second Line of Defense: Recognize and Reject High-Yield Temptations

Be highly cautious of phrases like “low risk, high return,” “instant collection,” or “principal protection” in investment schemes. Any request for bank card details, wallet addresses, or mnemonic phrases carries high risk and must be refused.

Third Line of Defense: Protect Personal Information and Asset Permissions

Never disclose private keys or mnemonic phrases, and do not lend or rent out accounts or payment codes. Once leaked, these can be exploited by criminals for money laundering, making you unknowingly a co-conspirator.

Fourth Line of Defense: Report Suspicious Clues Proactively

If you discover virtual currency money laundering, illegal transactions, or scams, report them to public security or financial regulatory authorities. Your report could be a key lead in solving major cases and help curb the spread of crime.

Summary: Virtual Currency Money Laundering Is Inescapable; Complacency Will Cost You

The Supreme Court’s work report once again clarifies: virtual currencies are not beyond the law; money laundering and capital flight will be severely punished. From policy bans to judicial crackdowns, from source control to full-chain enforcement, the country’s governance system for illegal crimes related to virtual currencies has become increasingly complete, with intensified efforts.

Although virtual currency money laundering appears covert, it is fully traceable, risks are predictable, and responsibilities are enforceable. On-chain fund flows, transaction behaviors, and address linkages are all within reach of advanced technical means. Any complacency will result in legal consequences—not a warning, but a fact.

For every individual and organization, complying with national laws and resisting illegal financial activities is not only a legal obligation but also the best way to protect oneself. Building a safe, compliant, and healthy virtual currency environment requires the joint effort of society to safeguard this defense line.