China has been seizing cryptocurrencies, including Bitcoin, as part of its ongoing ban on crypto trading. The government has confiscated a significant amount of cryptocurrency, specifically 15,000 BTC valued at $1.4 billion, from illegal transactions. In order to finance the local economy, local authorities have been selling the seized crypto assets, even though this conflicts with the ban on crypto trading. The lack of clear regulations on how to handle seized digital assets has raised concerns about inconsistencies and potential corruption. To address this issue, senior officials are discussing potential regulatory changes, with suggestions that the central bank may be best suited to manage these assets.
As the discussions on how to handle seized cryptocurrencies continue, the number of crypto-related criminal cases in China has surged. According to a blockchain security firm, funds tied to crypto crimes have skyrocketed tenfold to $59 billion in 2023. In 2024, China filed lawsuits against over 3,000 individuals involved in crypto-related money laundering. This rise in crypto crimes has also led to a 65% increase in government fines and revenue from consolidated assets over the past five years. Seized cryptocurrencies have now become a significant source of income for local authorities in cities where crypto usage is high.
Despite the official ban on crypto trading in China, a significant portion of the population still owns cryptocurrencies. Roughly 5.5% of China’s population, or 78 million people, own various crypto assets, with China being the second-largest holder of Bitcoin behind the United States. This widespread adoption of cryptocurrencies highlights the need for clearer regulations in the country to boost industrial growth. Legal clarification on trading these assets could increase demand for Bitcoin and other tokens, while also helping to reduce criminal activities associated with cryptocurrencies. The current regulatory vacuum in China poses challenges for the wider crypto market as it leaves opportunities for more criminal activities to take place.
In its efforts to manage seized cryptocurrencies, local governments in China have been partnering with private companies to convert these assets into cash for public finances. This has become a major revenue source for these authorities, even though it goes against the ban on crypto trading. The lack of clear regulations on how to handle seized digital assets has led to concerns about corruption and inconsistencies in the disposal methods being used. To address these issues, officials in China are discussing potential regulatory changes, with suggestions that the central bank may be best suited to manage these crypto assets.
China’s ongoing ban on crypto trading has led to a surge in the number of crypto-related criminal cases in the country. Funds tied to crypto crimes have increased significantly, with China filing lawsuits against thousands of individuals involved in crypto-related money laundering. This rise in crypto crimes has also resulted in a substantial increase in government fines and revenue from consolidated assets over the past five years. Seized cryptocurrencies have now become a significant source of income for local authorities in cities where crypto usage is high. This highlights the urgent need for clearer regulations in China to prevent further criminal activities and boost industrial growth in the crypto market.
