Analysis of New Model for Disposal of Involved Virtual Money: Cooperation between Beijing Public Security Bureau and Beijing Stock Exchange Raises Attention

Recently, the Beijing Municipal Public Security Bureau's Legal Affairs Division published an article regarding the handling of virtual money involved in cases, which has attracted widespread attention in the industry. Some believe this is a signal that China is lifting restrictions on virtual money trading, but the actual situation is not that simple.

The Beijing Municipal Public Security Bureau has signed a cooperation agreement with the Beijing Equity Exchange (BEE) for the disposal of the involved virtual money. The specific disposal model is as follows: the public security agency entrusts the BEE to dispose of the involved virtual money, the BEE selects a third party for operation, realizes it through a compliant exchange in Hong Kong, and finally transfers the funds to the account of the public security agency.

However, this model of domestic entrustment combined with overseas disposal is not a first. As early as 2023, some disposal companies began to adopt a similar approach. Overall, the judicial disposal of Virtual Money in our country has gone through three stages:

1. 2018-2021: Judicial authorities mainly monetized through over-the-counter (OTC) or private channels, which posed compliance risks.

2. 2021-2023: Based on regulatory requirements, disposal activities are transferred overseas, but there are still compliance issues in the settlement process.

3. From the end of 2023 to now: Some disposal companies have begun to adopt a joint disposal model both domestically and internationally, similar to the cooperation between the Beijing Public Security Bureau and the Beijing Stock Exchange.

The role of the Beijing Stock Exchange is actually more like that of an intermediary, as it needs to select professional service institutions for substantive operations. The 110% performance bond requirement mentioned in the article is relatively high in practice and may increase the difficulty of disposal. In addition, the regulations regarding disposal costs are also worth discussing and should refer to the relevant regulations in other regions, such as Shandong Province, which clearly stipulates that the recovery price of Virtual Money should not be less than 80% of the face value or balance.

For the future development trend, this cooperation should not be seen as a signal that China is about to relax regulations on Virtual Money trading. In fact, judicial handling of the virtual currencies involved has been ongoing, but the methods of handling are continuously being optimized. It is expected that in the next two to three years, mainland China will continue to maintain a strict regulatory attitude towards Virtual Money trading, and it is unlikely to fully open up for ordinary citizens to participate in trading.

Overall, the cooperation between the Beijing Municipal Public Security Bureau and the Beijing Stock Exchange reflects China's ongoing exploration and improvement in dealing with involved Virtual Money, but it does not signify a fundamental shift in regulatory policies. Relevant departments and practitioners still need to proceed cautiously within the compliance framework to ensure the legality and effectiveness of judicial disposal.