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| Image source: Binance |
Despite China’s long-standing ban on cryptocurrencies, the country now finds itself in a strange situation—holding billions of dollars worth of crypto assets that were seized from criminal activities. And the big question is: what should the government do with it?
It’s a twist that’s got everyone talking, from legal experts to financial analysts and even ordinary citizens who follow the crypto space. Let’s break it down.
🚫 A Strict Ban Still Stands
Back in 2021, China imposed one of the world’s strictest bans on cryptocurrency. It shut down crypto exchanges, banned trading, and even outlawed mining operations. The move was meant to protect investors and maintain financial stability.
But as we all know, banning something doesn’t always make it disappear.
Behind the scenes, the crypto world in China never fully died. Instead, it went underground. Illegal trading, scams, and even gambling using digital coins kept going. Last year alone, China reported over 3,000 cases related to crypto crimes, involving more than ¥430 billion (about $59 billion).
💰 Billions in Seized Crypto—Now What?
With so much illegal crypto being seized, local governments suddenly found themselves sitting on a mountain of digital coins like Bitcoin and Ethereum. Some reports estimate China now holds over $1.4 billion worth of seized cryptocurrencies.
The catch? They can’t legally trade or use it within the country.
So what are some cities doing? They’re quietly working with private firms to sell the crypto and convert it into Chinese yuan. These funds are then used to support local budgets, especially at a time when the economy is slowing down.
But not everyone is on board with this.
Experts and legal scholars argue this practice goes against the very law that bans crypto in the first place. There’s also concern about corruption and lack of transparency when private firms are brought in without public oversight.
🏦 A Central Solution in the Works?
Now, there’s growing pressure on Beijing to create a national policy on how to handle seized crypto. Some are suggesting that China’s central bank (PBOC) should step in and take control—either storing the crypto or selling it in regulated international markets.
Another idea being floated is to use Hong Kong—which has a more crypto-friendly environment—as a hub to manage and convert these assets legally.
At the heart of this issue is a bigger question: Should China treat crypto as something that can be owned and controlled, or continue to treat it as completely illegal?
🌍 A Global Impact
If China decides to build an official system for managing seized crypto, it could change how governments around the world handle digital assets. It might even lead to the creation of national crypto reserves, similar to how countries store gold or foreign currencies.
This would be a major shift from banning crypto outright to recognizing its value—at least as a financial tool when it suits national interests.
🧩 Final Thoughts
What’s happening in China right now is more than just a legal debate—it’s a turning point. As the government figures out what to do with seized crypto assets, it might accidentally open the door to broader regulation or even controlled acceptance in the future.
It’s a fascinating example of how even the most anti-crypto country might end up making room for digital currencies, not by choice, but by necessity.
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