According to Reuters, this situation has led to increasing calls for clearer regulations. These regulations would address how authorities should handle confiscated Bitcoin and other digital currencies.
With crypto trading banned in China, and these tokens not being recognized as legal tender or assets, the lack of guidelines has caused inconsistent and often opaque methods of disposal. This has raised concerns about potential corruption and could embolden lawbreakers.
China’s Crypto Crackdown Clashes with Cash Needs
Local governments, caught between enforcing the crypto ban and needing to replenish public coffers, have turned to private companies to sell the seized digital currencies in exchange for cash. This move, although helpful in replenishing funds, contradicts China’s official stance on crypto trading and highlights a gap in regulation.
China is selling seized crypto, despite its trading ban — Reuters reports.
Local governments are using private firms to sell crypto for cash to fund public budgets.
China reportedly holds 194,000 BTC (~$16B), making China the 2nd largest holder just behind the…
— Coin Bureau (@coinbureau) April 16, 2025
“This is a makeshift solution that, strictly speaking, is not fully in line with China’s current ban on crypto trading,” said Chen Shi, a professor at Zhongnan University of Economics and Law. As the amount of seized crypto continues to grow, experts and officials are urging better regulation to handle this emerging issue.
Calls Grow for Central Bank to Tame China’s Seized Crypto
The lack of rules has prompted debates. This is among judges, police, and lawyers about how to manage confiscated virtual currencies more effectively. Guo Zhihao, a Shenzhen-based lawyer, points out that China’s central bank could be better suited to deal with these digital assets. He suggests that the central bank could sell the seized coins overseas or even build a crypto reserve, much like former President Donald Trump’s plan to build a Bitcoin reserve for the U.S. “China’s central bank should step in,” Guo argues, highlighting the need for clear, centralized control over the growing crypto pile.
— Cointelegraph (@Cointelegraph) April 16, 2025
This discussion comes at a time of rising Sino-U.S. tensions during Trump’s second presidency. As the U.S. seeks to deregulate cryptocurrencies and develop a Bitcoin reserve. These changes could serve as a turning point for China’s crypto industry. Especially as calls for better supervision of the handling of seized digital currencies grow louder.
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