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    You are at:Home » China faces regulatory gap in handling seized crypto assets, relies on local firms: report
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    China faces regulatory gap in handling seized crypto assets, relies on local firms: report

    James WilsonBy James WilsonApril 16, 2025No Comments2 Mins Read
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    Seized cryptocurrencies are becoming a growing source of revenue for local Chinese governments, despite the country’s ban on crypto trading.

    As China‘s pile of seized cryptocurrencies continues to grow — thanks to a steady stream of illegal transactions — local governments are quietly turning to private firms to convert tokens into cash, Reuters reports.

    Chen Shi, a professor at the Zhongnan University of Economics and Law, told Reuters that such disposals a “makeshift solution that, strictly speaking, is not fully in line with China’s current ban on crypto trading,” suggesting that better oversight is needed as crypto crimes increase.

    Guo Zhihao, a lawyer from Beijing Yingke Law Firm, also pointed out there is a conflict between the crypto ban and the need to deal with seized tokens as China’s ban on crypto trading “conflicts with local authorities’ need to liquidate seized digital currencies.”

    China sells seized crypto despite ban

    Guo believes that the People’s Bank of China, the country’s central bank, should step in as it’s “better positioned to handle the cryptocurrencies, and should either sell them overseas or build a crypto reserve from seized tokens like Trump plans to.”

    Meanwhile, blockchain service provider Bit Jungle told Reuters that private companies can legitimately assist in the disposal of cryptocurrencies, provided they safeguard the assets, use licensed offshore exchanges, and comply with capital controls.

    Sun Jun, a crypto-focused lawyer and senior partner at Shanghai Landing Law Offices, says it’s a “highly profitable business that attracts more and more participants,” adding that the government should clarify the legal status of virtual currencies, establish a formal system for disposing of them, and screen the private companies involved.

    China closed its local cryptocurrency exchanges back in 2017, stifling the speculative market that accounted for 90% of global Bitcoin trading. In September 2021, the Chinese government introduced a complete ban on all crypto trades.



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