While countries like the United States plan for a crypto-centric future, China is taking a different approach, continuing to seize cryptocurrencies, including Bitcoin [BTC].
This has led to a sharp increase in the amount of crypto assets seized by the government.
Authorities have confiscated 15,000 BTC, valued at $1.4 billion, from illegal transactions, prompting local officials to find ways to dispose of them.
Selling seized crypto has become a major revenue source for local governments, which have partnered with private companies to convert assets into cash for public finances.
However, these disposal methods conflict with China’s ban on crypto trading.
According to a report, China lacks clear regulations on handling seized digital assets, resulting in inconsistencies and concerns about corruption.
To address this growing issue, senior judges, police, and lawyers are discussing potential regulatory changes.
According to sources familiar with the matter, China’s central bank is best suited to manage these crypto assets—either by selling them overseas or establishing a crypto reserve.
Criminal cases involving Bitcoin surge
As discussions over how to handle seized cryptocurrencies continue, the number of crypto-related criminal cases has surged. According to a blockchain security firm, SAFEIS, funds tied to crypto crimes skyrocketed tenfold to $59 billion in 2023.
In 2024, China filed lawsuits against 3,032 individuals involved in crypto-related money laundering. This rise in crypto crimes aligns with a 65% increase in government fines and revenue from consolidated assets over the past five years.
As a result, seized cryptocurrencies have become a significant source of income for local authorities in crypto-heavy cities.
Current state of crypto markets in China
Officially, crypto trading is banned in China. As such, there are no rules and regulations that help regulate even private companies that are helping local authorities dispose of seized Bitcoin and other tokens.
However, despite the ban, a significant share of the Chinese population owns cryptocurrencies.
According to a report, an estimated 5.5% of China’s population, or 78 million people, own various crypto assets. Specifically, China owns 194,000 BTC worth $16.3 billion, making it the second-largest holder behind the United States.
With such a massive adoption rate, the lack of legal clarity and total ban on trading is especially problematic for the wider crypto market.
Therefore, the Chinese government’s regulation of crypto trading hinders industrial growth. A legal clarification allowing the trading of these assets could boost Bitcoin and other tokens by raising demand.
Equally, when there’s proper regulation, it’s easy to curb and, in turn, reduce criminal activities associated with cryptocurrencies.
The current regulation vacuum leaves room for more criminal activities as crypto increasingly becomes popular.
Source: AMBCrypto / Digpu NewsTex