According to reports from Reuters, China is discussing how to dispose of confiscated crypto assets.
With the surge in cryptocurrency-related crimes (such as online fraud, money laundering, and illegal gambling), local governments in China have accumulated a large amount of confiscated crypto assets.
How many bitcoins the Chinese government currently holds remains a mystery.
According to Bitcoin investment firm River, by the end of 2023, local governments in China are estimated to hold about 15,000 bitcoins, valued at approximately $1.4 billion, making China the 14th largest holder of bitcoins in the world.
Other data indicates that China holds about 194,000 bitcoins (approximately the second largest in the world, second only to the U.S.), but this batch of bitcoins may have already been sold.
Nevertheless, the Chinese government has been accumulating more and more confiscated crypto assets in recent years.
In 2023, the amount involved in cryptocurrency-related crimes surged tenfold to 430.7 billion RMB (approximately $59 billion), with 3,032 individuals prosecuted for crypto money laundering in 2024.
Although cryptocurrency trading is banned in mainland China, local governments are partnering with private companies to sell confiscated crypto assets in overseas markets for cash to supplement fiscal revenue.
The dollar earnings from these assets are converted to RMB through local banks and transferred to local treasury accounts.
Chen Shi, a professor at Zhongnan University of Economics and Law, stated that this method of disposal is 'a stopgap measure and is not entirely consistent with the current regulations prohibiting crypto trading in China.'
Shenzhen lawyer Guo Zhihao, who also participated in the seminar, stated that China's ban on cryptocurrency trading conflicts with the local authorities' need to liquidate confiscated digital currency.
However, Julia Huang, co-CEO of Hong Kong's largest licensed cryptocurrency exchange HashKey, stated that China might want to emulate Trump's approach by using confiscated bitcoins as a strategic reserve, with the central government integrating asset disposal.
This could change the game for China's crypto industry, especially as tensions between China and the U.S. escalate during Donald Trump's second term as president.
Moreover, to avoid being constrained by the U.S., future international trade is likely to be settled in cryptocurrencies.
At the same time, Trump plans to relax regulations on cryptocurrencies and has already established the U.S. Bitcoin Federal Reserve using bitcoins confiscated by the U.S. government.
