Local authorities in China are reportedly using private companies to sell confiscated cryptocurrencies overseas to bolster their budgets. This information comes from transactional and court documents cited by Reuters.
The lack of clear regulations on how officials should handle seized cryptocurrencies has led to “inconsistent and opaque approaches.” Some legal experts fear this could foster corruption schemes, according to the agency.
The sale of digital assets has become a significant source of revenue. By the end of 2023, local authorities held approximately 15,000 BTC (~$1.4 billion).
Currently, Bitbo estimates that Chinese officials control 194,000 BTC (~$16.3 billion). In this regard, the country ranks second only to the United States, which holds 207,189 BTC (~$17.37 billion).
In an interview with the agency, Professor Chen Shi from Zhongnan University of Economics and Law explained that the authorities’ actions “do not fully align with the existing ban on cryptocurrency trading.”
The situation is exacerbated by the rise in digital asset-related crimes, ranging from online fraud and illegal gambling to money laundering. Over the past year, courts have begun hearing more than 3,000 cases related to the legalization of illegal proceeds.
Experts interviewed by Reuters consider it advisable either to sell the cryptocurrencies or to accumulate them in a special reserve, as has been proposed in the United States.
Specialists have not ruled out an increased focus by authorities on digital assets due to the potential intensification of capital flight amid a trade war.
Back in April, former BitMEX CEO Arthur Hayes stated that new US tariffs could trigger a shift of funds from CNY to Bitcoin.