Although (new regulations) are not specifically targeted at the cryptocurrency industry, their introduction will definitely affect the industry's operations, mainly concerning the following three aspects:
First is the inflow and outflow of virtual currency;
Second is the freezing and unfreezing of bank cards;
Third is the investigation, freezing, and disposal of involved virtual currencies.
First, although our country currently does not completely prohibit virtual currency investment, it has effectively prohibited citizens from participating in almost all channels of virtual currency investment. For example, the exchange channels between Renminbi and virtual currencies, as well as traditional payment and transfer channels, have explicitly prohibited providing services for virtual currency transactions. Whether it is traditional bank cards or third-party payments such as WeChat and Alipay, they have clearly stated that they do not provide financial services for virtual currency transactions. In reality, many U traders on virtual currency exchanges like Binance and OKEx are still using personal transfers, fake orders, red packets, and small wallets.
At this time, once the flow of fiat currency or virtual currency is related to a criminal case (such as illicit funds, marked illicit U, etc.), the corresponding bank accounts, WeChat, or Alipay payment accounts are very likely to be frozen; for the investigating agency, they must operate according to the (new regulations), and those whose funds are frozen can review whether the agency's freezing actions comply with the regulations based on the new regulations.
Second, regarding the situations involving illicit funds and U currencies in virtual currency transactions, the phenomenon of U traders being frozen without involving illicit money is gradually increasing. Some U traders have had their funds frozen after being criminally charged with illegal operations, while others have been subjected to the explicitly prohibited 'pre-investigation freezing' in the (new regulations). There have even been instances of accounts on virtual currency exchanges being frozen. Of course, in terms of proportion, most of these cases involve fraud, online gambling, pyramid schemes, money laundering, etc. For freezing agencies, they must strictly adhere to the (new regulations) during the freezing operation.
For the parties involved in the funds, the avenues or solutions for relief will become clearer with the introduction of the new regulations.
Third, the impact on the investigation, freezing, and disposal of the involved virtual currencies. (New regulations) clearly state: for non-cash properties such as bonds and stocks, they can be searched and frozen, but cannot be deducted; it is even explicitly stated that the property involved cannot be deducted in the name of the suspect pleading guilty or returning stolen property. So how should the involved property be disposed of? In principle, it can only be disposed of by the court.
Then the question arises:
Currently, most criminal cases involving virtual currency have at least the following issues that need to be resolved:
Can the investigating agency transfer the involved virtual currency by directly registering a new wallet address?
If the answer to the first question is negative, then how can the security of the involved virtual currency be guaranteed?
Can the involved virtual currency be directly exchanged for other currencies (for example, exchanging non-stablecoins for stablecoins) during the investigation phase?
According to the provisions of (new regulations), the answers to the above questions seem to be negative. However, based on the judicial practice in criminal cases involving virtual currency, not being able to transfer, exchange, or convert the involved virtual currency may have a disruptive impact on the entire case.
