#AdvancementOfCross-BorderCriminalVirtualCurrencyDisposalMechanism Advancement of Cross-Border Criminal Virtual Currency Disposal Mechanisms

In recent months, authorities worldwide have accelerated efforts to tackle the growing challenge of disposing of virtual currencies linked to cross-border criminal activities. As digital assets continue to expand rapidly, their borderless and pseudonymous characteristics have complicated traditional law-enforcement, judicial, and regulatory approaches. In response, governments are advancing new legal frameworks, strengthening interagency coordination, and deepening international cooperation to ensure that illicit virtual assets can be traced, seized, and lawfully disposed of without undermining financial stability.
China has been at the forefront of these developments. In late November 2025, the People’s Bank of China (PBOC) convened a high-level meeting with multiple state agencies to address renewed crypto-related speculation and crime. A notable outcome was the formal inclusion of stablecoins within the scope of virtual currency regulation, reflecting growing concern over their use in money-laundering, fraud, and illegal cross-border transfers. This move aims to close longstanding gaps in AML oversight that have hindered the effective handling of criminal digital assets.
Judicial reforms have progressed in parallel. The Supreme People’s Court has issued updated guidelines clarifying procedures for the seizure, valuation, and disposal of virtual currencies, as well as the responsibilities of related platforms. These measures help standardize judicial practice nationwide and provide a clearer legal basis for cross-border cooperation, evidence handling, and asset realization in cases involving fraud, telecom scams, and money-laundering.
On the operational side, practical disposal mechanisms are also maturing. In mid-2025, Beijing piloted frameworks allowing law-enforcement agencies to convert seized cryptocurrencies into fiat currency within a short timeframe through licensed offshore exchanges and state-owned trading platforms. This approach addresses the challenge posed by the domestic ban on crypto trading, while ensuring compliance, transparency, and the orderly repatriation of criminal proceeds.
Prosecutorial authorities have further emphasized diversified judicial disposal paths for criminal virtual assets. Recent policy guidance stresses balancing financial regulation with property-rights protection, seeking to ensure that asset disposal is both legally sound and operationally efficient. This reflects a more nuanced understanding of virtual currencies as objects of criminal law enforcement rather than merely speculative instruments.
Internationally, these efforts align with broader global trends. Jurisdictions are updating AML and counter-terrorism financing regimes to explicitly cover virtual assets and VASPs, consistent with FATF standards. As countries such as Pakistan move toward regulated digital-asset frameworks, the shared priority remains preventing virtual currencies from facilitating illicit cross-border flows.
Overall, the advancement of cross-border criminal virtual currency disposal mechanisms is being driven by clearer regulatory definitions, standardized judicial processes, workable disposal channels, and expanding international cooperation. Together, these developments are closing the gap between asset seizure and lawful disposal, reinforcing both criminal justice effectiveness and the integrity of the global financial system.