New Trends in the Judicial Disposal of Involved Virtual Money and Future Development Trends

Recently, there have been some new developments in the judicial disposal of virtual money involved in cases. This has particularly drawn widespread attention in the industry after a certain city's public security agency announced the adoption of a new model. Many judicial authorities and disposal companies have consulted, hoping to understand the specific operation of this new model, as well as whether domestic judicial disposal must go through similar intermediary institutions. At the same time, some people hope to assess the future trends of judicial disposal in mainland China.

1. Analysis of New Models

This new model involves a certain property trading platform, which is a state-owned enterprise. According to public information, this platform is authorized to serve as a network judicial auction platform for courts at all levels and a platform for the disposal of property involved in criminal proceedings to be turned over to the national treasury. However, on its official website, the main announcements are about the disposal projects of traditional involved properties, and no Virtual Money disposal projects have been seen yet.

In practice, after the exchange signs a trust disposal agreement with the public security organs, it then entrusts the business to a third-party disposal company, which conducts disposal, cashing, and fund settlement work abroad. This model is essentially still a "domestic + foreign joint disposal" approach, without substantial innovation or breakthroughs.

2. Discussion on the Necessity of Intermediary Institutions

Considering the current regulatory provisions for virtual money in our country, domestic third-party disposal companies have already become a "temporary compromise" in judicial activities. Introducing additional intermediary structures seems unnecessary.

In September 2021, a notice jointly issued by multiple national ministries clearly stated that activities related to Virtual Money are considered illegal financial activities, and the exchange of legal currency and Virtual Money is strictly prohibited. This regulation has no exceptions, meaning that in mainland China, no entity (including judicial authorities) is allowed to engage in the exchange of Virtual Money and fiat currency.

Against this background, the disposal and monetization of the virtual money involved has evolved from the early direct monetization within the country to the current model of entrusting a third party for monetization abroad. The current "domestic + overseas joint disposal" model basically meets regulatory requirements at the business level.

Therefore, in the absence of essential optimization in the current model, the disposal process should be simplified as much as possible to avoid introducing unnecessary intermediaries. This aligns with Occam's Razor principle: entities should not be multiplied without necessity.

3. Prediction of Future Development Trends

At present, the judicial authorities across the country still have differences in the disposal modes of the virtual money involved in cases. Some regions are still using the early "original model," where the mainland judicial authorities directly entrust domestic entities to cash out domestically. This practice not only violates relevant regulatory provisions but may also bring legal, political, and public opinion risks.

Although there is a relatively compliant "3.0 model", many judicial authorities or disposal companies are unaware of it, or fail to strictly comply due to various factors during actual operations. However, non-compliant disposal methods are no different from planting a time bomb in judicial activities, which will inevitably lead to problems sooner or later.

In the first half of 2024, the Supreme People's Court launched several research projects, including "Judicial Disposal of Virtual Money Involved in Cases," indicating that the judicial system has recognized the complexity of this field and is seeking a unified standard for practical operations.

For the future development direction, the following three situations may occur:

1. Under the existing regulatory framework, continue to use the current disposal model, primarily adopting the compliant "3.0 disposal" model, while non-compliant disposal situations may occasionally arise.

2. Amend relevant regulatory provisions to allow judicial authorities to directly dispose and liquidate assets abroad.

3. Modify regulatory provisions to establish a unified disposal platform within the country (possibly at the central or provincial level), providing disposal services for judicial authorities by banks, traditional judicial auction platforms, or local property exchanges.

Regardless of the direction taken in the future, ensuring the compliance and transparency of the disposal process will be key. At the same time, it is also necessary to balance the relationship between judicial efficiency and risk control to adapt to the ever-changing Virtual Money environment.