According to a report by Reuters, as the number of illegal cryptocurrencies seized in China surges, local governments are selling these digital currencies, such as Bitcoin, through private companies to inject cash into their finances. However, the lack of unified regulations has raised concerns about opacity and potential corruption, prompting calls from courts, lawyers, and the financial industry for increased regulation.

In China, cryptocurrency trading has been banned, and digital tokens are not considered legal currency or assets. Nevertheless, local governments are leveraging private companies to sell seized cryptocurrencies for cash to alleviate the financial pressure brought on by economic slowdown. According to data from blockchain security firm Wangguanju, in 2023, the amount involved in cryptocurrency-related crimes in China reached 430.7 billion yuan (approximately 59 billion USD), a tenfold increase year-on-year. The Supreme People's Procuratorate revealed that 3,032 people were prosecuted last year for suspected cryptocurrency money laundering.

Local governments have benefited significantly from this. In 2023, local confiscation revenue reached a record 378 billion yuan, a 65% increase over five years. In some cities, seized cryptocurrencies have become an important source of finance.

Disposal Methods Spark Controversy

Currently, local governments are selling seized cryptocurrencies in overseas markets through private companies. For example, a technology company in Shenzhen named Jiafenxiang has sold over 3 billion yuan worth of cryptocurrencies for places like Xuzhou, Hua'an, and Taizhou in Jiangsu since 2018, with the proceeds converted into yuan through banks and deposited into local financial accounts. According to statistics from Bitcoin investment firm River, by the end of last year, local governments in China held approximately 15,000 Bitcoins, valued at 1.4 billion USD, making them the 14th largest Bitcoin holders globally.

However, this practice exists in a legal gray area. Chen Shi, a professor at Zhongnan University of Economics and Law, stated that this "stopgap measure" does not fully align with China's cryptocurrency trading ban. Shenzhen lawyer Guo Zhihao pointed out that there is a conflict between the ban and local governments' need to liquidate cryptocurrencies. Sun Jun from Shanghai Landin Law Firm described it as a "lucrative business" that has attracted more and more private companies, but there is a lack of regulations governing their behavior.

Calls for Regulatory Reform

Guo Zhihao from Beijing Yingke Law Firm suggested that the People's Bank of China should take over the disposal of cryptocurrencies or emulate former President Trump's plan to establish a crypto reserve using seized tokens. HashKey Exchange co-CEO Ru Haiyang proposed that the central government could manage it uniformly, drawing on Trump's strategic reserve concept. Marvinston, a part-time professor at NYU School of Law, suggested establishing a cryptocurrency sovereign fund in Hong Kong to centrally manage seized digital assets and maximize their value.

Participants indicated that relevant parties are close to reaching a consensus, planning to allow judicial institutions to recognize cryptocurrencies as assets and establish unified procedures to regulate disposal processes. These changes could soon alter how China handles seized cryptocurrencies, especially against the backdrop of increasing tensions in US-China relations due to the relaxed cryptocurrency policies during Trump's second term.

Criminal Cases Drive Discussion

The surge in cryptocurrency-related crimes has intensified the urgency of the discussion. From online fraud to money laundering and illegal gambling, cases involving cryptocurrencies are rapidly increasing. Lawyer Liu Honglin stated that there are currently no regulations governing private companies that assist local governments in disposing of cryptocurrencies, and this situation urgently needs to change.

Industry insiders are calling for a clear definition of the property attributes of cryptocurrencies, the establishment of dedicated institutions or systems to handle seized digital currencies, and enhanced scrutiny of third-party companies. Lawyer Sun Jun stated that a unified regulatory framework could not only reduce the risk of corruption but also ensure that the disposal process is more transparent and efficient.

Disclaimer: This article represents the author's personal views and does not reflect the position or views of this platform. This article is for informational sharing only and does not constitute any investment advice to anyone. Any disputes between users and column writers are unrelated to this platform.

Join our community to discuss this event

Official Telegram community: t.me/aicoincn

Chat room: Wealth Group

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。