Listen, an interesting thing is happening in China. Although the country officially banned the trading of cryptocurrencies back in 2021, in fact, everything is not so clear. As it turned out, local authorities are actively selling confiscated bitcoins and other digital assets to replenish depleted budgets amid the economic downturn. This is confirmed by the transactions and court documents that came into the hands of Reuters.
Curiously, the authorities themselves do not directly trade in crypto (because it is formally impossible). Instead, they attract private companies that convert crypto into fiat (mainly yuan) through foreign exchanges. For example, the Jiafenxiang company from Shenzhen has sold more than $400 million worth of cryptocurrencies on behalf of cities in eastern China since 2018 alone. The proceeds are then credited to local budgets. Formally, the ban seems to be respected, but the money is already in the system.
Legally, all this is held on thin ice. China still does not have clear legislation on the handling of confiscated digital property, especially when it comes to cases involving fraud, money laundering or online gambling. Experts, both judges and lawyers— increasingly say that urgent reform is needed, otherwise it creates the ground for corruption and "gray" schemes.
Some experts even suggest centralizing the process — for example, transferring control of the confiscated crypt to the People's Bank of China. Others believe that China can quietly create its own bitcoin reserve, looking at American ideas like a "national crypto reserve."
An interesting contrast: on the one hand, a complete ban on trading and strict control over capital outflow; on the other, real billions in cryptocurrencies that have already been converted and used for the needs of the state. All this is happening in parallel with the development of the digital yuan (e-CNY), which China promotes as a secure and controlled alternative to bitcoin.
In short, all this looks like a temporary "fire" solution, but it may well develop into a new strategy. The question now is something else:
Will China eventually become the largest state holder of cryptocurrencies, despite the official ban?
