The Dilemma of "Awareness of Illegality" in Digital Currency Crimes and Its Resolution

Currently, digital currency has become an important part of China's payment system. At the same time, due to the attributes of digital currency such as decentralization, anonymity, and openness, it has also had a certain impact on the safety and stability of national financial credit funds. Moreover, an increasing number of cases show that digital currency can be used to hide, transfer, and "launder" criminal proceeds and their gains, making it a potential means of accompanying crime.

Since digital currency has developed for a relatively short time, a legal normative system regarding digital currency has not yet been established. The object of the understanding of illegality is the legal norms, which leads to a lack of completeness in judging the understanding of the illegality of actors in digital currency crimes.

In the judicial supervision system, although the state has formulated and issued some relevant legal norms and policies to strengthen the regulation of the digital currency market and combat related illegal activities, the incomplete legal normative system for digital currency and its unique attributes still pose many problems in the process of combating digital currency crimes, such as behavior qualification, charge selection, and amount determination. Among these issues, the difficulty in determining the understanding of illegality and its impact on the degree of criminal responsibility of the actor often becomes the focus of debate among the prosecution, defense, and judiciary.

Currently, China has launched a pilot program for digital renminbi and is establishing a regulatory system for digital currency. Against this background, it is necessary to intensify research on the understanding of illegality in digital currency crimes to achieve effective governance of digital currency crimes.

Difficulties in Determining the Understanding of Illegality in Digital Currency Crimes

Difficulties in identifying the object of understanding illegality. Due to the short development time of digital currency, a legal normative system regarding digital currency has not yet been formed, and the object of understanding illegality is the legal norms, which leads to a lack of completeness in judging the understanding of illegality of actors in digital currency crimes, with private digital currency crimes being the most typical. Currently, the regulatory basis for digital currency mainly relies on relevant financial policies issued by national ministries and administrative regulations targeting virtual currencies. This complex and non-specific regulatory basis results in a lack of evaluative objects for understanding illegality, thus falling into a judgment dilemma.

The relationship between understanding illegality and social harm is ambiguous. Social harm is the minimum standard for judging understanding illegality; only when the actor realizes that their behavior has social harm can the judgment of understanding illegality be made. In the case of digital currency crimes, the main legal interests infringed upon are the national financial management order and citizens' property. However, since there are no explicit regulations in legal norms regarding the regulation of digital currency, it becomes difficult to determine the legal interests infringed upon by digital currency criminal behavior. Moreover, since the economic losses caused by digital currency crimes to citizens' property are recoverable, whether citizens' property rights have been substantially infringed may also be in an uncertain state.

The rules for erroneous judgment of understanding illegality still need improvement. The determination of digital currency crimes requires that actors have some understanding of the laws regulating digital currency transactions and the related technical engineering, but judging their level of understanding is not an easy task. Whether the policies implemented and responses made by different types and levels of financial institutions can produce reasonable reliance effects, thereby affecting the judgment of actors' understanding of illegality, still requires in-depth discussion.

In addition, the existing regulations regarding the distribution rules of rights and obligations concerning digital currency are ambiguous, leading to difficulties for practitioners in clearly understanding the scope and specific content of the review obligations of relevant financial institutions, which in turn creates challenges in judging the erroneous standards of understanding illegality by personnel in financial institutions during digital currency transactions.

Standards for Determining Understanding Illegality in Digital Currency Crimes

Based on the characteristics of decentralization and anonymity of digital currency and the elements constituting understanding illegality, the judgment of understanding illegality in digital currency should be conducted in the following order and content.

First, digital currency traders should understand the relevant legal norms. On one hand, regarding legal digital currency, it is essentially a digital form of legal tender, and therefore, it should comply with the existing laws and regulations regarding legal tender. According to relevant regulations, China's legal digital currency is the digital renminbi. The People's Bank of China has currently launched a pilot program for the issuance and circulation of digital renminbi, and Article 19 of the "People's Bank of China Law (Draft for Comments)" grants digital renminbi legal status. If this draft is approved, China will regulate legal digital currency according to this law, and traders of legal digital currency should clearly understand the legal system of legal digital currency centered on the "People's Bank of China Law."

On the other hand, regarding private digital currency, it has obvious decentralization, which distinguishes it from virtual currency. Private digital currency is not regulated by network operators but is self-regulated by traders, thus private digital currency transactions cannot directly apply the legal regulatory system for virtual currencies or virtual properties. However, currently, there are no legal norms regarding private digital currency in China, and the judgment of understanding illegality concerning private currency transactions can only refer to the legal norms regarding virtual currencies and relevant policies concerning private digital currency.

Second, digital currency traders should clearly recognize that the relevant behavior has social harm. When engaging in legal digital currency transactions, even if traders do not fully understand the provisions of the People's Bank of China Law regarding legal digital currency, based on common sense, they should know that they cannot privately forge, issue, or solicit national legal digital currency, as such behavior would harm the national financial order. If such behavior occurs, it can be determined that the actor recognizes that the behavior has social harm.

Currently, according to the "Announcement of the People's Bank of China on Preventing Risks of Token Issuance Financing," China prohibits trading private digital currency in the domestic market, and registration for private currency trading markets and renminbi exchanges cannot be conducted. Private digital currency traders who privately open trading venues and conduct renminbi exchanges cannot achieve this through domestic banking payment systems but need to rely on overseas accounts for secondary settlement. At this point, the actor should recognize that this behavior is prohibited by the state, and once implemented, it undermines the national financial regulatory order.

Finally, whether there is an inevitable judgment regarding the erroneous understanding of illegality by digital currency traders. Specifically: First, whether digital currency traders have the objective conditions to understand the law. This can mainly be determined through the actor's educational background, professional status, and living environment. For those with a bachelor's degree or higher in finance or related fields, their ability to acquire knowledge about digital currency trading is generally higher than that of the average citizen. Similar groups include staff from financial institutions and government departments involved in financial regulation, who have a higher sensitivity to changes in digital currency policies and regulations. For these two groups, it can be presumed that they possess the capacity for understanding illegality.

Second, whether digital currency traders have made efforts to ascertain the relevant legal norms regarding digital currency. When digital currency traders hold an uncertain attitude towards digital currency transactions, they should apply to the People's Bank of China and the government departments responsible for financial regulation for administrative responses regarding the legality of digital currency trading behavior. The effectiveness of responses obtained from commercial banks and experts, due to their lack of credibility and authority compared to government administrative responses, cannot be regarded as having made efforts to ascertain the relevant legal norms regarding digital currency.

In fact, most municipal areas have branches of the People's Bank of China and financial regulatory government departments, so verifying whether digital currency traders have made efforts to ascertain the relevant legal norms regarding digital currency is realistically possible. In summary, the judgment of erroneous understanding of illegality by digital currency traders should conform to the "three common" judgments of common sense, common feelings, and common reasoning.

Responses to Doubts About the Determination of Understanding Illegality in Digital Currency Crimes

First, can the judgment of understanding illegality for actors engaging in pyramid schemes and fraud using digital currency transactions as a tool apply the aforementioned determination standards? The author believes that such behavior cannot apply the judgment standards for understanding illegality in digital currency crimes, as such behavior essentially belongs to pseudo-digital currency crimes. The distinction between pseudo-digital currency crimes and digital currency crimes lies in the fact that pseudo-digital currency does not possess the characteristic of decentralization; it is issued by specific monetary institutions and can be infinitely issued, with speed and quantity completely controlled by the platform.

Pseudo-digital currency crimes are fundamentally different from digital currency crimes and cannot apply the judgment standards regarding understanding illegality in digital currency. Furthermore, regarding pseudo-digital currency pyramid schemes and fraud crimes, the only change is in the target of the crime; the objective behavior is essentially still pyramid scheme behavior and fraud behavior, and the subjective intent remains the same, which is the knowing destruction of others' property rights and the national regulatory order, showing no essential difference from traditional pyramid schemes and fraud, thus requiring no separate explanation or elaboration.

Second, can the existence of erroneous understanding of illegality in digital currency crimes serve as a reason for a lighter sentence? The author believes that the lack of understanding of illegality can become a mitigating circumstance for discretionary leniency. Digital currency crimes essentially belong to criminal offenses, but due to the decentralization characteristics of digital currency, the determination of their understanding of illegality has certain particularities. The relationship between understanding illegality in digital currency crimes and the assumption of criminal responsibility is the same as in general crimes.

Understanding illegality is a component of intent; if there is an error in understanding illegality, the condemnability at the subjective intent level is reduced. An error in understanding illegality cannot negate the establishment of a crime, but it reduces the condemnability of the actor at the subjective level, and based on the principle of responsibility, the criminal responsibility borne by the actor can be mitigated. Therefore, errors in understanding illegality in digital currency crimes can become a mitigating circumstance for discretionary leniency.

(Authors are respectively an associate professor and a master's student at the Law School of Southwest University of Political Science and Law)