From the Shanghai High People's Court Virtual Currency Enforcement Guidelines: Three Practical Issues in Judicial Handling of Virtual Currency Cases

Author: Attorney Shao Shiwei

Original text link:

Statement: This article is a repost. Readers can obtain more information through the original text link. If the author has any objections to the reposting format, please contact us, and we will make modifications according to the author’s request. The repost is only for information sharing and does not constitute any investment advice. It does not represent the views or positions of Wu Shuo.

The full text is as follows:

In criminal cases involving cryptocurrency, due to the lack of clear legal basis, the judicial handling of virtual assets has long been a highly controversial issue in practice.

On February 9, 2026, the Shanghai Municipal Higher People’s Court issued the “Guidelines for Regulating the Enforcement Work Concerning Network Virtual Property (Trial)” . This is, within the court enforcement system, the first time that a higher court has issued systematic rules for the entire enforcement process of virtual property under its name. These Guidelines incorporate virtual currency into the category of enforceable property.

However, from the perspective of an attorney’s case-handling practice, although this document provides systematic provisions for stages such as the seizure, custody, and disposition of virtual currency during the enforcement phase, it still does not offer a clear path to resolve high-frequency practical problems. This article will, in combination with these Guidelines and case-handling practice, discuss three major pain points in the judicial disposition process of virtual currency.

1. The virtual currency involved is often handled by the police in advance during the investigation stage

In criminal cases involving virtual currency, it is relatively common for public security authorities to dispose of the virtual currency involved at the investigation stage, for reasons typically including large price fluctuations, high custody difficulty, and the need to liquidate to make reparations to victims.

But the problem with this approach is that: before the court has confirmed guilt through trial and before the amount involved has been determined, the virtual currency involved has already been disposed of in advance.

At this time, the case is still at the initial stage of criminal proceedings. Whether the conduct constitutes a crime, and what specific offense it falls under, has not yet been determined; whether the virtual currency involved should be characterized as illegal proceeds or lawful property, whether it meets the threshold for prosecution, also has not yet been verified; and related evidence is still being collected and verified.

Disposing of virtual currency at this stage essentially constitutes an in-substance disposition of property whose legal evaluation has not yet been completed.

More importantly, this handling is irreversible: once the virtual currency is liquidated, it is difficult to revert. If the conclusion changes—such as if the case is not found to constitute a crime—the disposed virtual currency cannot be restored to its original condition.

At the same time, in some cases handled by Attorney Shao, it can be seen that the evaluation of the case is in fact influenced by the already-executed disposition results: even if there is controversy over the characterization of the case as a crime or not, the space for an acquittal finding is clearly compressed under the premise that the property involved has already been disposed of. Attorney Shao has also discussed this issue in a prior article titled “Before a court verdict, the public security authorities should not dispose of the virtual currency involved!”

The limitation of the Guidelines issued this time lies in:

First, they only provide regulations for the enforcement stage and cannot constrain the widespread problem of prior disposal at the investigation stage;

Second, even in the enforcement stage, the Guidelines do not address the core issue of “no ability to revert after disposal”—that is, in cases where a case is withdrawn, no prosecution is initiated, or a finding of not guilty is declared, how already-disposed property should be returned still lacks clear rules.

2. Non-unified disposition paths and inconsistent price determinations directly affect the amount used to determine guilt

1. In specific cases, the disposition method for the virtual currency involved is not uniform.

Based on case-handling practice, regarding the disposition path for virtual currency, in some cases public security authorities liquidate directly through OTC off-exchange trading channels and U swaps; in others, they handle it through overseas exchanges; in some, third-party institutions operate on their behalf; and in some cases, the parties themselves are allowed to liquidate through their own disposal.

From a procedural standpoint, some have completed approval formalities and produced written records, while others only have a single “statement of circumstances” that provides a brief account of the disposal process.

Currently, it is already relatively common for public security authorities to commission third-party institutions to participate in disposition. In practice, such institutions often involve under the name of “technical services” or “disposition assistance,” with large differences in fee proportions. In some cases, disposition costs reach 15% to 30% of the amount involved. When the amount involved is easily in the tens of millions or over 100 million, this implies the existence of substantial disposition costs.

According to a Reuters report, a technology company in Shenzhen has, since 2018, represented governments in disposing of more than RMB 3 billion (30+亿元) worth of cryptocurrencies across multiple locations. But based on the current situation, these third parties are not the subjects of judicial disposition; their qualification standards, entry conditions, and boundaries of responsibility are not clearly defined.

2. Compared with the diversification of disposition paths and the lack of unified rules, the issue of price determination for virtual currency is even more prominent.

Based on Attorney Shao’s experience communicating with case handlers across multiple places nationwide, the standards for recognizing the same coin in different cases are not consistent: some use the price on the seizure date as the basis; some calculate based on the actual liquidation (disposal) price; some refer to the time point when the case was issued; and some use the costs the parties incurred to purchase the virtual currency as the basis. The price sources also differ; they may come from exchange average prices, specific trade prices, third-party quotations, or even an internally determined situation.

There is also no unified standard for the timing of reference points. In some cases, disposition is carried out immediately after seizure; in others, it is delayed by several months or even longer. The difference in the disposition timing often directly leads to a significant difference in the benchmark price of the coin.

When determining the reference price, there is no unified rule, and both cases where the price is too high and where it is too low have occurred. Once a price is adopted, it directly corresponds to the determination of the amount involved, thereby affecting the outcome of determining guilt and sentencing.

To address the above issues, Article 18 of the Guidelines attempts to construct a price determination mechanism through the path of “market price—negotiated price—asking for quotations—assessment,” and introduces rules such as “reference price from network service providers” and “online transaction prices” to provide a framework for price recognition.

However, from the perspective of actual enforcement, the core problem is still not resolved: the relationship between the price used as the basis for determining guilt and the actual disposition price has not been clarified; key concepts such as “market price” and “online transaction price” lack specific definitions; and the standards for applying procedures such as auctions and price liquidation are also not further detailed.

At the same time, when the parties do not accept the price determination, there still lacks a clear path for relief.

3. Lack of rule support for collaboration with overseas exchanges; enforcement still remains at “can be frozen, hard to transfer”

In a large number of cases, the virtual currency involved is actually stored in accounts of overseas centralized exchanges. But based on the current enforcement situation, judicial authorities’ ability to investigate, freeze, and control such assets remains limited.

Based on practical experience, if the defendant cooperates, the assets can be disposed of by transferring them to a designated account. But if the defendant does not cooperate, normally only account freezing can be achieved, while direct transfer of virtual currency is difficult.

Regarding this problem, Attorney Shao has also written and discussed it in a related case handled previously (“When virtual currency is frozen by the judiciary, if the parties refuse to cooperate, can forced enforcement be carried out?”).

From a technical standpoint, judicial authorities in China can achieve account freezing through sending letters or requests for assistance, but they cannot directly force a charge/transfer deduction from overseas exchanges. From a legal standpoint, overseas exchanges are not directly subject to China’s judicial jurisdiction; the extent of their cooperation depends on their own compliance policies, arrangements for judicial assistance, and the degree to which they recognize the identity of the requesting party.

But in actual operation, there are also a series of more specific problems. For example, there is a lack of stable identity verification and trust mechanisms between overseas exchanges, and external communication channels are not unified; during submission of enforcement materials, there are also concerns about information leakage; and if an exchange refuses to cooperate or the response period is too long, there is no clear contingency plan.

Although the Guidelines do not directly prescribe a cooperation mechanism with overseas exchanges, through Articles 17, 20, and 22, they leave some room for a path of “domestic entrustment, overseas disposition, and closed-loop return.” This model has a practical foundation in certain cases. For instance, before the issuance of the Guidelines, the People’s Court of Baoshan District in Shanghai successfully used this model to dispose of more than 90,000 FIL coins.

However, from the standpoint of rules, “overseas disposition” has not formed a workable institutional arrangement. For example, the selection standards for overseas exchanges, the disposition approval procedures, the qualification requirements for third-party institutions, and the rules for recognizing overseas transaction prices are all not clearly specified.

In circumstances where enforcement fails—for example, if an overseas exchange does not cooperate, responses are delayed, or abnormal prices and asset risks arise during the transaction—there are also no provisions for corresponding relief paths and responsibility-assumption mechanisms.

In addition, although Article 22 of the Guidelines sets forth principled requirements for foreign exchange administration, it does not detail the specific operational procedures. In practice, approval paths for cross-border capital return, material requirements, and cycle arrangements still heavily depend on coordination case by case.

Against this backdrop, the disposition of assets held at overseas exchanges still mainly relies on the defendant’s cooperation and case-specific operational experience, and has not formed a stable and predictable enforcement mechanism.

4. Conclusion

From the standpoint of the enforcement procedure itself, the Guidelines make relatively clear arrangements for the rules on seizure and custody of virtual currency. At the current stage, this has real practical significance.

But from the actual perspective of case handling, judicial disposition of virtual currency often does not occur at the enforcement stage; rather, it is typically sold off during the criminal proceedings.

Under this premise, merely improving rules at the enforcement level is still insufficient to address the core issues in practice. The resolution of the relevant problems still depends on establishing corresponding rules earlier in the disposition process.