Chinese prosecutors want to use mixer use as evidence of money laundering: the logic already written into Western KYC systems.
An article published in the Procuratorate Daily – the official journal of China’s Supreme People’s Procuratorate – written by two district prosecutors from Hunan and a law professor at Xiangtan University, proposes making the use of mixers and “privacy coins” evidence of intent to launder money, unless the defendant provides “reasonable counter-evidence”. The recommendations, reported by Bitcoin Magazine, carry no binding legal force, but they have produced the usual wave of indignation directed at the Beijing government.
The authors’ reasoning is straightforward: if you use a tool designed to obscure the trail of transactions, you are signalling criminal intent. Privacy becomes, by legal construction, “evidence of guilt”. This logical leap – treating caution as confession – is presented as an authoritarian aberration peculiar to a regime. It is worth asking, however, whether European and American regulatory architectures have already travelled the same path, only with more presentable language.
KYC – Know Your Customer – was born as an anti-fraud and anti-money-laundering instrument. In its current form, it requires every financial platform to collect, verify and retain the identifying data of every user before they can conduct any transaction. The underlying principle is identical to that of the Chinese prosecutors: anyone who wants to operate without revealing their identity is to be treated with suspicion. In the West this principle is applied preventively, across the entire population, rather than retrospectively against individual defendants.
The FATF – Financial Action Task Force – has over the years extended its recommendations to digital assets, introducing the so-called Travel Rule: every transfer of digital assets above a certain threshold (set by FATF at USD/EUR 1,000, although jurisdictions may adopt different thresholds) must be accompanied by the identifying data of both sender and recipient. The European Union incorporated this framework into the MiCA regulation and the Transfer of Funds Regulation (TFR), bringing the Travel Rule to a zero threshold for all digital asset transfers between regulated platforms (CASP-to-CASP). For transfers to non-custodial wallets, the threshold remains: platforms must verify that the customer controls the destination wallet only for amounts above 1,000 euros. In practice: if you want to move bitcoin to a wallet you control, above that threshold the platform must confirm that you control it. Every exit from the surveilled perimeter becomes, administratively, a suspicious act. Bull Bitcoin has already brought the DAC8 directive before the French Conseil d’État, challenging the European fiscal surveillance framework.
The problem runs through the entire modern financial surveillance system – from banks’ suspicious transaction reports to the automatic flagging systems of credit cards – which operates on behavioural patterns, not on evidence of crime. A customer who uses cash frequently, who buys bitcoin, who uses a VPN, who makes international transfers: each of these behaviours generates a signal in some compliance officer’s database. Each of these behaviours is legal. Their combination produces a profile that the system considers worthy of attention.
System errors are far from marginal. An audit by the LAPD Inspector General documented that over a two-month period – 1 August to 30 September 2025 – automatic licence plate readers had led to the stopping of 161 innocent people, whose cars had been incorrectly classified as stolen in the system. The audit covered multiple ALPR systems in use by the department, including that of Flock Safety, whose contract the LAPD subsequently allowed to expire. It is a textbook case: automated surveillance produces rapid and widespread consequences, with an error rate that human beings would rarely accept from themselves.
The criminalisation of privacy is a tendency that cuts across the form of government that hosts it. The digital ruble and the digital euro share the same control architecture, with different aesthetics. Mandatory universal KYC and the presumption of guilt for those who use privacy tools share the same premise: that financial confidentiality is a privilege granted by the state, revocable when the state sees fit, rather than a right. The extension of the temporary Chat Control regime to 2028 – approved by the EU Council and surviving the European Parliament vote of 9 July 2026, where more MEPs voted against than in favour but without reaching the absolute majority needed to block it – indicates that this logic extends well beyond finance.
Chinese prosecutors have the involuntary merit of clarity: they say openly what the Western KYC system produces through bureaucratic means. Using a privacy tool is suspicious. The difference between the two approaches is procedural, with the same philosophical premise. Beijing wants to use mixer use as evidence in court; Brussels and Washington want to use it as grounds to freeze an account before the matter ever reaches a court.
