China’s Supreme People’s Procuratorate (SPP) is ramping up its fight against cybercrimes and online fraud facilitated by blockchain technology and metaverse platforms. The SPP is concerned about the increasing number of illicit activities in the digital asset landscape, including money laundering and investment scams.
The SPP has noticed a significant rise in cybercrimes committed on blockchains and within the metaverse. Criminals are exploiting cryptocurrencies for illegal purposes such as money laundering, making it difficult to trace their proceeds. Ge Xiaoyan, deputy prosecutor-general of the SPP, has revealed a shocking 64% year-on-year increase in cybercrime-related telecom fraud charges, highlighting the seriousness of the situation. Traditional crimes like gambling, theft, pyramid schemes, and counterfeiting have also transitioned to cyberspace, posing challenges for law enforcement.
Xiaoyan’s official statistics show worrying trends, with charges of internet theft increasing by nearly 23% and those related to online counterfeiting and sales of inferior goods skyrocketing by almost 86%. Procuratorates have pressed charges against around 280,000 individuals involved in cybercrime cases between January and November, representing a significant 36% year-on-year increase. These cyber-related offenses accounted for 19% of all criminal charges during the period, highlighting the scale of the problem faced by law enforcement agencies.
Zhang Xiaojin, director of the Fourth Procuratorate of the SPP, has issued a strong warning to citizens and participants in the digital asset market about the rising number of investment scams in the local crypto economy. Xiaojin has emphasized the emergence of new cybercrimes exploiting the metaverse, blockchain, and binary options platforms, with digital currencies being the center of these illicit activities. He has urged stakeholders to be extra vigilant and cautious in their digital asset transactions.
The regulatory approaches in mainland China and Hong Kong differ significantly. While China is taking proactive measures to crack down on digital asset-related crimes, Hong Kong has opted for crypto-friendly regulations to standardize the digital asset ecosystem and protect investors’ interests while promoting innovation. These contrasting strategies highlight the complexities of regulatory responses to the growing digital asset landscape, as jurisdictions struggle to find a balance between security and innovation.
The People’s Bank of China (PBoC) has also intensified its efforts to regulate cryptocurrencies and decentralized finance. It emphasizes the importance of a coordinated regulatory approach across nations in its latest financial stability report, signaling a shift away from unilateral measures. The PBoC recognizes the global nature of the cryptocurrency ecosystem and the challenges posed by fragmented regulatory frameworks, highlighting the need for international cooperation.
