KEYTAKEAWAYS
- Personal crypto holding and trading are generally not treated as illegal business activities under Chinese law.
- Crypto-related money laundering still requires proof of knowing or should-have-known criminal intent.
- Using crypto to help others conduct cross-border currency exchange can trigger serious criminal liability.
- KEY TAKEAWAYS
- CLARIFYING CRYPTO CRIMINAL LIABILITY: MONEY LAUNDERING STILL REQUIRES PROOF OF “KNOWING INTENT”
- JUDICIAL CONSENSUS ON CRYPTO MONEY LAUNDERING: WHEN IS THE CRIME COMPLETE?
- PERSONAL CRYPTO TRADING ≠ ILLEGAL BUSINESS OPERATIONS, BUT “HELPING OTHERS EXCHANGE CURRENCY” IS HIGH RISK
- FINE-TUNING UNDER HARDLINE REGULATION: DRAWING CLEAR CRIMINAL RED LINES
- DISCLAIMER
- WRITER’S INTRO
CONTENT
China’s courts clarify crypto criminal liability: personal trading is generally not illegal, money laundering requires knowing intent, and assisting cross-border exchange via crypto carries high legal risk.
Amid China’s ongoing hardline approach to crypto regulation, how to determine whether crypto-related activity constitutes a crime has remained a central and highly debated issue in practice. Recently, the Shanghai High People’s Court convened a special judicial seminar to unify legal standards in cases involving crypto-related money laundering and illegal business operations.
The seminar outlined several important judicial tendencies. Notably, purely personal crypto holding and trading activities are generally not classified as illegal business operations. The discussions also further clarified the subjective intent and evidentiary thresholds required for money laundering offenses, drawing clearer legal boundaries around the criminal liability associated with crypto activities in recent years.
CLARIFYING CRYPTO CRIMINAL LIABILITY: MONEY LAUNDERING STILL REQUIRES PROOF OF “KNOWING INTENT”
The seminar first focused on the most contentious issue in crypto-related money laundering cases: how to determine “subjective knowledge.” In practice, authorities have often inferred criminal intent based on abnormal indicators such as unusually high premiums, high-frequency transactions, or anonymous operations.
However, the discussion made clear that money laundering remains an intentional crime. Courts should not convict solely on the basis of abnormal transaction patterns. In cases involving “laundering funds for others,” prosecutors must still prove that the individual knew or should have known that the funds involved were proceeds of crimes explicitly defined by law. Mere suspicion or a sense that something is “off” is insufficient to establish money laundering.
JUDICIAL CONSENSUS ON CRYPTO MONEY LAUNDERING: WHEN IS THE CRIME COMPLETE?
The seminar also unified standards on how to assess money laundering conducted via crypto asset transfers. Previously, courts differed on whether laundering was only complete once crypto was converted back into fiat currency.
The consensus view is that the essence of money laundering lies in concealing or disguising the source and nature of criminal proceeds. As such, conversion back into fiat is not required. Under the judicial interpretations jointly issued by China’s top courts and effective in 2024, transferring or transforming criminal proceeds through virtual asset transactions alone already constitutes money laundering.
PERSONAL CRYPTO TRADING ≠ ILLEGAL BUSINESS OPERATIONS, BUT “HELPING OTHERS EXCHANGE CURRENCY” IS HIGH RISK
On the highly watched issue of illegal business operations, the seminar offered relatively clear guidance. Illegal business offenses are administrative in nature and hinge on whether the conduct involves ongoing, profit-oriented operations that violate state regulations or seriously disrupt financial order.
Accordingly, the seminar noted that personal crypto holding, trading, or self-directed arbitrage—without providing services to others, operating on a sustained basis, or charging fees—generally should not be classified as illegal business activity.
However, if an individual knowingly assists others in exchanging renminbi and foreign currency outside official channels—using a “RMB → crypto → foreign currency” structure and charging fees—this may be deemed disguised foreign exchange trading. In serious cases, such conduct could constitute the crime of illegal business operations.
FINE-TUNING UNDER HARDLINE REGULATION: DRAWING CLEAR CRIMINAL RED LINES
Overall, the seminar does not signal any relaxation of China’s strict stance on crypto regulation. Instead, it refines the application of criminal liability within the existing policy framework, drawing clearer lines between speculation and business activity, and between mere suspicion and provable intent. This approach aims to improve consistency and predictability in judicial outcomes.
After years of a comprehensive ban on crypto trading and mining, this judicial clarification is widely seen as an important step toward more precise definitions of criminal conduct in the crypto space.
