China's Supreme People's Procuratorate Proposes Adopting Use of Crypto Mixers and Privacy Coins as Evidence of 'Subjective Intent' for Money Laundering

On July 13, 2026, China's Supreme People's Procuratorate (SPP) presented new guidelines that presume the use of virtual asset mixers and privacy coins as having criminal intent for money laundering, moving beyond simple cases of suspicion. This signifies a decisive shift in digital asset enforcement methods and is a measure to establish new standards for how investigative authorities legally interpret concealment activities utilizing blockchain technology.

The proposal, published in the Supreme People's Procuratorate's official journal, calls for new blockchain evidence rules, principles for presuming criminal intent, and the establishment of a national platform for selling seized coins.

The SPP is preparing legal standards that can utilize the defendant's act of using mixers or privacy coins itself as evidence of 'subjective intent' to conceal illegal funds. This demonstrates the prosecution's determination to use the defendant's technical choices as a decisive clue to the crime in the process of proving the illegality of the funds.

Evolution of China's Anti-Money Laundering Framework

China's Anti-Money Laundering (AML) legal framework has been continuously strengthened since its initial implementation on January 1, 2007. In particular, the legal basis has become more solid as virtual asset transactions were specified as an official means of money laundering through amendments to legal interpretations announced in August 2024 and 2025.

• 2007: Adoption and implementation of China's first Anti-Money Laundering Law
• August 2024: Introduction of a legal interpretation officially recognizing virtual asset transactions as a money laundering method
• July 13, 2026: Proposed guidelines presuming criminal intent for the use of mixers and privacy coins

According to reports from Chainalysis and CNBC Africa, Chinese-speaking money laundering networks moved approximately $16.1 billion in illicit funds throughout 2025. This accounts for about 20% of global virtual asset crime, serving as a key background for the Chinese authorities' introduction of this regulatory proposal.

Zhang Xiaojin, Director of the Fourth Procuratorate of the Supreme People's Procuratorate, emphasized that more aggressive enforcement measures will be taken against illegal foreign exchange activities and money laundering using virtual assets. As the global volume of illicit virtual asset transactions surged to $154 billion in 2025, a 162% increase from the previous year, pressure on law enforcement agencies within China is also intensifying.

Management of Confiscated Assets and the Role of Telegram

The SPP proposed the establishment of a state-operated platform to centrally manage and liquidate confiscated digital assets, moving away from existing ad-hoc disposal methods. This is interpreted as an attempt to systematize virtual asset enforcement infrastructure at the national level to ensure transparent disposal of confiscated assets and their return to the national treasury.

Looking at the operational mechanisms of illicit networks, Telegram plays a central hub role. So-called 'guarantee' platforms use Telegram to connect China's capital flight demand with the liquidity of international drug cartels, forming a massive shadow financial ecosystem.

If the new guidelines are applied, it is expected to become very difficult for defendants to prove a 'lack of awareness'—that they did not know the funds were illicit. Legal experts analyze that if prosecutors designate the use of privacy tools as a deliberate attempt to conceal the source of funds, the defendant's right to defense could be significantly restricted.

This measure is expected to have a significant chilling effect on the remaining over-the-counter (OTC) markets in China. Furthermore, whether judicial authorities in other countries follow China's precedent of criminalizing the use of privacy tools will be a major variable in the future global virtual asset regulatory environment.