China Taps Hong Kong Exchanges to Unload Seized Cryptocurrencies

• China is set to embark on a historic exercise to sell all the Bitcoins seized in crime cases in partnership with regulated exchanges in Hong Kong. 
• Currently, China is reported to be among the top holders of digital assets with 194,000 BTC and 833,000 ETH. 

China has announced its intention to sell Bitcoins that were seized in criminal cases on regulated exchanges in Hong Kong. According to the report, this initiative is in collaboration with the China Beijing Equity Exchange (CBEX).

Reviewing the report, we discovered that the authorities plan to convert the marked digital assets into Yuan and deposit them in a designated account. Hong Kong is reported to have been chosen for its reputation as a digital asset hub. As detailed in our previous news coverage, Hong Kong’s Financial Secretary, Paul Chan Mo-po, has confirmed the city’s interest in becoming a dynamic crypto market.

Also, this exercise is the first of its kind since China imposed a crypto ban some years back. As mentioned in our previous news brief, the Country joined Iraq, Russia, and 10 others to impose strict restrictions on digital assets.

More About the Upcoming Bitcoin Liquidation

According to our research, billions of dollars worth of digital assets could be sold. As of 2023, China had 430.7 billion yuan ($60 billion) worth of assets. Basically, this is more than a twelvefold increase from the previous year.

Research shows that this trend has been common amongst economic superpower countries, with the US reportedly holding around 200,000 Bitcoins ($16 billion) in seized assets. According to our recent update, the US is planning to use them to fund its strategic Bitcoin reserve.

Data also shows that the UK has more than 61,000 seized Bitcoins. As indicated in our earlier discussion, the UK has been contemplating selling $6.27 billion worth of the asset to settle debt. For China, available data shows that it holds around 194,000 BTC and 833,000 ETH.

China has been intensifying its crackdowns on “exchanges, ICOs, and mining” since 2017. Meanwhile, some notable Chinese officials have been spotted at some crypto events in Hong Kong, according to reports. China’s lack of rules around how authorities should handle seized crypto has, according to lawyers, led to opaque and inconsistent approaches.

Inconsistencies Around China’s Bitcoin Ban and Ongoing Selling Activities

Reuters has, in a previous report, disclosed that the Local Government has been using a private company to sell seized digital assets. According to a professor at the Zhongnan University of Economics and Law, Chen Shi, this situation is not fully in line with the country’s ban on crypto trading.

A renowned lawyer, Liu Honglin, has also hinted that seized digital assets have, over the years, become a major contributor to the local finances in some cities. According to him, no rules currently regulate the sales of cryptos by private companies on behalf of local governments.

Shenzhen-based technology company Jiafenxiang, for instance, is reported to have sold 3 billion yuan ($417 million) worth of assets in offshore markets for local governments. As of the end of 2024, China’s local governments were estimated to hold 15,000 Bitcoins ($1.4 billion).