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Addressing the Surge of Blockchain Cybercrimes: China’s Response

Addressing the Surge of Blockchain Cybercrimes: China’s Response

In response to the escalating threat of cybercrimes, particularly those exploiting blockchain and metaverse platforms for illicit activities, the Supreme People’s Procuratorate (SPP) of China, the nation’s apex prosecutorial authority, has intensified its efforts to combat digital offenses. Expressing deep concern over the proliferation of online fraud, cyber violence, and breaches of personal information, the SPP has undertaken proactive measures to tackle these emerging challenges head-on.

Rising Cybercrimes and Emerging Trends

The SPP has reported a significant surge in cybercrimes perpetrated through blockchains and within the metaverse, reflecting evolving tactics employed by criminals to exploit digital technologies for illicit gains.

  • Utilization of Cryptocurrencies for Money Laundering: Criminal elements increasingly leverage cryptocurrencies for money laundering purposes, exacerbating the difficulty in tracing illicit wealth and prosecuting offenders.

Ge Xiaoyan, deputy prosecutor-general of the SPP, has highlighted a disturbing trend of cybercrime-related telecom fraud, with charges rising by 64% year-on-year. Furthermore, traditional forms of criminal activities such as gambling, theft, pyramid schemes, and counterfeiting have extended their operations into cyberspace, compounding the challenges faced by law enforcement agencies.

Challenges and Prosecutorial Responses

The SPP has confronted the mounting challenges posed by cybercrimes through rigorous prosecution and strategic intervention.

  • Escalation of Internet Theft and Counterfeiting: Charges related to internet theft have surged by nearly 23%, while offenses linked to online counterfeiting and sales of inferior goods have witnessed an alarming increase of almost 86%.
  • Proactive Prosecutorial Actions: Procuratorates have pressed charges against approximately 280,000 individuals implicated in cybercrime cases between January and November, reflecting a 36% year-on-year increase. These cyber-related offenses now constitute 19% of all criminal charges, underscoring the gravity of the situation.

Heightened Vigilance in Digital Asset Landscape

Zhang Xiaojin, director of the Fourth Procuratorate of the SPP, has issued warnings to citizens and digital asset participants regarding investment scams prevalent in the local cryptocurrency economy.

  • Emerging Cybercrime Frontiers: Xiaojin has highlighted the proliferation of new cybercrimes utilizing the metaverse, blockchain, and binary options platforms, underscoring the growing significance of digital currencies as focal points for illicit activities.

Divergent Regulatory Approaches

China’s efforts to combat digital asset-related crimes stand in contrast to the regulatory approach adopted by Hong Kong, a special administrative region of China.

  • Regulatory Landscape: While mainland China has pursued stringent regulations and imposed bans on virtually all crypto transactions and mining, Hong Kong has embraced a more crypto-friendly regulatory framework aimed at fostering innovation while safeguarding investor interests.
  • Regulatory Imperatives: The People’s Bank of China (PBoC) has emphasized the need for coordinated regulatory efforts across international jurisdictions to effectively regulate the burgeoning cryptocurrency industry, addressing issues related to cryptocurrency regulation and decentralized finance in its latest financial stability report.
  • Inter-Departmental Coordination: In 2021, the PBoC announced comprehensive measures to combat crypto adoption within mainland China, advocating for stronger inter-departmental coordination in cracking down on crypto activity in the country. Despite the ban, mainland China has remained a major crypto-mining hub, highlighting the challenges in enforcing regulatory measures.

Key Features of China’s Response to Cybercrimes

Feature Description
Prosecutorial Actions Proactive prosecution against cybercrimes.
Regulatory Landscape Contrasting regulatory approaches between mainland China and Hong Kong.
Inter-Departmental Coordination Emphasis on collaborative efforts in combating crypto-related offenses.

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