China’s Communist Party Targets Crypto-Linked Graft in New Resolution

China’s Communist Party has directed anti-corruption investigators to pursue graft involving virtual currency, blockchain, cross-border money transfers and the internet, under a resolution published on Sunday. The directive was adopted on Oct. 29 at the party’s closed-door Fifth Plenum. Xinhua’s English translation, about 14,000 words long, mentions virtual currency in a single sentence. It does not change existing law because mainland China already bans cryptocurrency trading. Officials, relatives and intermediaries who hide wealth in digital coins or offshore accounts now face greater scrutiny. The resolution targets white-glove intermediaries who act on behalf of officials and seeks to close revolving-door arrangements in which retired officials move into business. Officials whose family wealth clearly exceeds their income will be investigated, and businesses run by officials’ spouses and children will face routine checks. Public blockchains could prove useful to investigators. Because ledger records are permanent, transfers remain traceable years after execution. Yao Qian, a former senior financial regulator, has been under investigation since April 2024. Yao once headed the People’s Bank of China’s digital currency institute, which developed the digital yuan. CCTV reported in January that a businessman gave him 2,000 Ether in 2018. Chinese media valued the crypto bribes at about 68.3 million yuan ($9.8 million) when Ether peaked. Investigators followed the coins across wallets and later found bank accounts Yao controlled under other names. The resolution also proposes a big-data platform to track how officials exercise power and pledges more work to pursue fugitives and recover stolen assets overseas. It calls for a stronger party presence inside platform companies and high-tech firms, a change investors in China’s tech sector will need to watch. Higher party bodies will supervise party branches within internet companies more closely, and party committees at state-owned enterprises and financial firms will review major business decisions before they are made. The crypto measure adds little new policy. It sets no deadline, names no penalties and identifies no cases. A notice issued in February by eight agencies had already extended China’s cryptocurrency ban to stablecoins and asset tokenization. Despite the crackdown, Beijing is continuing to build blockchain infrastructure. The economic blueprint released in October includes plans for a national blockchain network.