DIGITAL ASSETS IN CRIMINAL PROCEDURE: THE LEGAL GAP BETWEEN RECOGNITION AND VALUATION

Digital assets have crossed the threshold of being “unnamed intangible assets under the law.” However, when a digital wallet holding millions of USD in crypto assets becomes material evidence in cases of theft, fraud, fraudulent multi-level marketing (MLM), or exchange collapses, the legal question is no longer simply whether the asset exists. Instead, it becomes: how to seize it, how to identify the rightful owner, at what time point to conduct valuation, and how to dispose of it to both preserve the evidentiary value in the case and safeguard legitimate property rights?

This represents a complex legal intersection among criminal law, criminal procedure, civil law, valuation regulations, and blockchain technology.

1. Transitioning from a “Grey Area” to a New Legal Status The Law on Digital Technology Industry 2025 has classified digital assets as property pursuant to the provisions of the Civil Code, categorizing them into virtual assets, crypto assets, and other digital assets. This is a crucial transitional step, bringing digital assets out of a complete absence of legal grounds.

However, being recognized as property does not automatically equate to having a fully-fledged procedural framework to handle such assets.

The current challenge lies in establishing who owns a specific digital asset, its monetary value, what data serves as proof, and to what extent the State can control, seize, preserve, and dispose of it.

2. Possession of Value Does Not Guarantee Ease of Valuation Decree No. 250/2025/ND-CP regulates asset valuation in criminal proceedings. Nevertheless, the intrinsic characteristics of digital assets complicate the application of traditional valuation methods.

The price of digital assets can fluctuate wildly, vary across trading platforms, depend on liquidity, and even be subject to market manipulation. For tokens traded exclusively on internal systems, the listed price may fail to reflect their actual economic value.

Consequently, “market price” does not always equate to “actual value.”

In particular, a clear distinction must be made among the asset’s value at the time of misappropriation, the time of seizure, and the time of trial. These three distinct junctures can yield three entirely different valuations, whereas asset value directly affects the determination of damages and criminal liability.

3. Blockchain Confirms Transactions, But Not Necessarily Ownership Blockchain records transaction histories between wallet addresses, yet it does not always directly identify the natural or legal person behind those addresses.

A private key grants technical control over an asset, but technical control does not automatically equate to legal ownership.

This presents a particularly complex issue in cases involving exchange collapses or fraudulent MLM schemes, where the assets of corporate entities, individual investors, and third parties may coexist within a single wallet system or be routed through multiple addresses.

Therefore, blockchain data must be corroborated with contracts, transaction records, documentary evidence, and other proof to establish property rights.

4. Seizing the Physical Device Does Not Constitute Seizure of the Asset Investigating authorities may seize mobile phones, computers, or data storage devices. However, the physical device is merely a means of access; the actual asset resides on the blockchain.

A sealed smartphone does not mean the Bitcoin stored in the wallet has been brought under State control. Conversely, holding a private key imposes exceptionally high requirements regarding cybersecurity, custody, and access control management.

Accordingly, regarding digital assets, the procedural mindset must shift from “seizing the container of the asset” to “controlling the right of disposition over the asset.”

5. Exchange Collapses and Fraudulent MLM: The Ownership Dilemma When a digital asset exchange collapses, the assets held in corporate wallets are not automatically the corporate entity’s property. Such wallets may concurrently hold investor assets, corporate funds, third-party assets, and proceeds of crime.

If seized indiscriminately as assets belonging to the accused, there is a significant risk of infringing upon third-party legal rights. Conversely, delayed freezing orders allow assets to be rapidly transferred across multiple addresses, potentially moving beyond law enforcement jurisdiction.

Digital assets thus trigger a race between the speed of blockchain execution and the pace of legal proceedings.

In fraudulent MLM models, valuation becomes even more intricate when tokens hold value dictated solely by the issuing entity without actual market liquidity. In such instances, a distinction must be drawn among the listed price, transaction price, and the underlying economic value of the rights represented by the token.

6. Prominent Legal Risks Failure of the law to keep pace with practical realities may give rise to:

Erroneous determination of property rights, compromising the legitimate interests of third parties.

Inaccurate valuation leading to misclassification of offenses, improper determination of liability frameworks, or inaccurate assessment of damages.

Loss, dissipation, or unauthorized transfer of assets during the procedural process due to a lack of effective measures to control disposition rights.

Notably, valuation errors extend beyond economic impact; in certain criminal cases, they directly influence the determination of damages, charge qualifications, and sentencing brackets.

7. Need for an “Identification – Valuation – Disposition” Mechanism To effectively manage digital assets in criminal procedure, the legal framework must focus on three core pillars:

Identification: Establishing wallet addresses, controlling parties, asset origins, transaction histories, and legal rights attached to the asset.

Valuation: Formulating dedicated criteria concerning the timing of valuation, data sources, liquidity parameters, price discrepancies across platforms, and specific methodologies for illiquid or abnormally volatile assets.

Disposition: Clearly regulating mechanisms for asset freezing, custodial preservation, private key security, asset conversion, and the restitution or final disposition of assets upon conclusion of the case.

This must function as an integrated mechanism combining legal principles, blockchain forensics, data security, and financial valuation, rather than mechanically applying traditional physical evidence management models.

Conclusion Formal legal recognition of digital assets constitutes an important milestone, but recognition is merely the starting point.

The underlying challenge is building a sufficiently rigorous procedural chain to answer five fundamental questions: What is the asset? To whom does it belong? What is its value? Who maintains control during legal proceedings? And how will it ultimately be disposed of?

The current legal gap no longer centers on whether digital assets constitute property, but rather on the legal system’s capacity to identify, value, control, and recover digital assets in a lawful, accurate, and timely manner.