Pioneering Cooperation to Address Virtual Currency Crimes

China's is facing a serious problem as its growing pile of seized cryptocurrency from illegal transaction is prompting local governments to find an effective way of dispososing all these crypto.

Lawyers says there is a lack of rules around how authoriteis should handle seized Bitcion and other tokens whose trading is banned from mainland.

This has also spawned inconsistent and opaque approaches that some might fear could embolden lawbreakers and foster corruption.

But the Chinese government could have just found a breakthrough after the legal team of the Beijing Municipal Public Security Bureau has joined forces with the Beijing Property Rights Exchange, also known as the Beijing Stock Exchange, to establish a groundbreaking mechanism.

This partnership was formalized with the signing of the Framework Agreement on Cooperation in the Disposal of Virtual Currency in the Case, marking a significant step forward in the management of digital assets linked to legal proceedings.

Seized Cryptocurrency Passed On To Beijing Stock Exchange for Disposal

Under the new framework, virtual currency seized in criminal investigations is classified under the “physical handing over” category.

This approach is designed to facilitate the efficient management and disposal of digital assets, addressing the surge in virtual currency-related crimes in recent years.

Authorities have faced persistent challenges, particularly the inability to dispose of these assets directly within Chinese jurisdiction and the risks associated with cross-border transactions during law enforcement operations.

To overcome these obstacles, the Legal Brigade of the Beijing Municipal Public Security Bureau and the Beijing Stock Exchange have expanded their collaborative efforts.

Through thorough research and analysis of relevant policies, regulations, and procedural pathways, they have come out with a innovative solution.

In the proposal, public security agencies entrust the seized virtual currency to the Beijing Stock Exchange for disposal.

Once entrusted, the Beijing Stock Exchange selects professional service institutions to carry out essential operations such as testing, receiving, and handing over the virtual currency.

The disposal itself is conducted through regulated public cash sales on exchanges based in Hong Kong.

Following the completion of national foreign exchange management procedures, the proceeds are transferred to a special account designated for the public security agency handling the case and ultimately handed over to the State Treasury.

New Mechanism Put Into Action

This new disposal mechanism has already been successfully applied in a case managed by the Shunyi Public Security Bureau, demonstrating its practical effectiveness.

By enhancing both the efficiency and security of virtual currency disposal, this cooperation model sets a precedent for handling similar cases in the future.

It also reflects Beijing’s commitment to combating virtual currency crimes with innovative and forward-thinking solutions, ensuring that law enforcement agencies are equipped to address the evolving challenges of the digital asset landscape.