Chinese Authorities Secretly Sell Seized Crypto Despite National Ban

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Local Chinese Authorities Sell Seized Crypto Despite National Trading Ban

In China, the increasing number of cryptocurrencies that are being seized during police operations is posing difficulties for appropriate asset management by local authorities due to a lack of clear legislation. Legal experts, financial professionals, and judges alike have called for standardized guidelines on how to handle confiscated digital currencies.

Despite China outlawing cryptocurrency trading within its borders, some local governments are partnering with private firms to sell off confiscated digital tokens. This is done through clandestine sales in foreign markets, which allows these municipalities to boost their financial resources and aid their ailing economies. However, it’s essential to note that these activities still violate Chinese law.

According to a Reuters report, lawyers argue that complex digital processes in online environments can undermine accountability due to suspicious activities linked to corruption scandals. Meanwhile, legal seminars among attorneys indicate growing consensus on granting courts recognition of cryptocurrencies as property assets and setting consistent guidelines for their handling during disposal proceedings.

The urgency for China to implement reforms has intensified in response to the steep rise in illicit activities involving cryptocurrencies. A leading blockchain security firm, SAFEIS, reported a staggering tenfold increase in financial transactions linked to money laundering and fraudulent crypto crimes, reaching an astounding 430.7 billion yuan ($59 billion) in 2023. According to national prosecutorial data, approximately 3,000 individuals were charged with cryptocurrency-related money laundering offenses during the same period.

As an analyst, I’ve noticed that cryptocurrency-related seizures amounted to an impressive 378 billion yuan over the past year, setting a record high since 2015 and indicating a substantial 65% increase. Liu Honglin, a legal advisor to local governments, has pointed out that criminals prefer cryptocurrencies due to their ability to transfer funds across borders without any identification.

In the context of this trend, a Shenzhen-based tech firm named Jiafenxiang has reportedly facilitated the sale of 3 billion yuan worth of crypto assets for governments such as Xuzhou, Hua’an, and Taizhou since 2018. These sales are said to occur through foreign market transactions that undergo domestic bank swaps into government accounts. However, Jiafenxiang has remained tight-lipped about the specifics of this operation, while the aforementioned cities have yet to provide any insight regarding these transactions.

Additionally, the Bitcoin investment company River estimates that Chinese local governments collectively held approximately 15,000 bitcoins by the end of 2024, equivalent to a market value of $1.4 billion. This puts China in the 14th position among global Bitcoin holders.

Although no specific new policies have been outlined following recent legal conferences, it’s apparent that the stance of authorities has shifted due to the growing impact of cryptocurrencies on both illegal activities and legitimate financial operations. This necessitates the establishment of transparent monitoring mechanisms.

Transactions of cryptocurrency holdings being converted into cash provide a means for municipal budgets to acquire financial aid from overseas markets, particularly when those budgets are strained by an ailing economy.

Also read : China Highlights Digital Yuan Growth Amid Rising U.S. Tariffs

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2025-04-16 16:11