China's Communist Party targets crypto in anti-corruption campaign

China's Communist Party has directed investigators to pursue corruption involving virtual currency, blockchain and cross-border money transfers in a resolution published Sunday. The resolution also covers corruption conducted through the internet. Party leaders adopted the resolution on October 29 during the Fifth Plenum, a meeting held behind closed doors. Xinhua released an English translation of approximately 14,000 words, with virtual currency appearing in one sentence.

The directive leaves existing law unchanged because mainland China already bans crypto trading. Officials, relatives and intermediaries who conceal wealth in digital coins or offshore accounts face the risk. The resolution targets intermediaries known as "white gloves," who act on officials' behalf. The resolution also targets revolving-door arrangements involving officials entering business after retirement. Officials will face scrutiny when family wealth substantially exceeds income. Businesses operated by officials' spouses and children will undergo routine inspections.

Public blockchain ledgers preserve transfer records, allowing investigators to trace coins even years after a transaction. Yao Qian, a former senior financial official in China, came under investigation in April 2024. Yao previously headed the central bank's digital currency institute, which developed the state-run digital yuan. CCTV reported in January that a businessman gave Yao 2,000 Ethereum (ETH) in 2018. Local media valued Yao's crypto bribes at approximately 68.3 million yuan ($9.8 million) when Ethereum reached its peak. Investigators traced the coins across wallets and subsequently located bank accounts that Yao controlled in other people's names.

The resolution proposes a big-data platform for tracking officials' exercise of power. The resolution also promises efforts to pursue fugitives and retrieve stolen assets overseas. The resolution seeks a stronger Party presence within platform companies and high-tech firms, adding an oversight change for investors in China's tech businesses. Higher Party authorities will supervise Party branches within internet companies more closely. Party committees at state-owned companies and financial firms will examine major business decisions before those decisions are taken.

The crypto directive introduces little additional policy: the resolution specifies neither a deadline nor penalties and identifies no cases. A notice issued in February by eight agencies had already extended China's crypto prohibition to stablecoins and asset tokenization. Beijing continues to develop blockchain infrastructure despite the crypto restrictions. China's new economic blueprint, released in October, includes plans for a national blockchain network.