China sells bitcoin and cryptocurrencies by millions

China, the country that considers Bitcoin (BTC) and cryptocurrency transactions illegal, is selling millions in digital assets seized after detecting criminal operations. What is happening is that the governments of their provinces are liquidating these cryptoactives and turning them into yuan to save their finances in turbulent times for markets, and in the meantime a question remains in the air, can China continue to ignore the power of digital currencies such as Bitcoin, in a world that already embraces them?

Since 2021, China maintains a strict ban on trade and cryptocurrency mining, not recognizing them as legal assets. However, the Increased cryptoactive confiscated in criminal investigations He has forced local authorities to seek practical solutions.

According to Reuters, the governments of cities such as Xuzhou and Taizhou delegate to private companies the sale of these assets in international exchanges, repatriating funds to relieve public coffers, beaten by the current economic slowdown. However, the lack of a clear legal framework generates concerns about corruption, money laundering and the sustainability of this practice in a context of growing crime with digital assets.

Chen Shi, a professor at the Zhongnan University of Economics and Law, warns that this practice is an “improvised solution” that contradicts the current prohibition. And additionally, in a recent seminar in Beijing, experts agreed that the absence of a regulation creates significant risks. “Without clear norms, seized cryptocurrencies sales are fertile land for irregularities,” said Liu Honlin, a lawyer specialized in cryptoactive.

The rise of illegal activities related to cryptocurrencies has triggered confiscations in China. According to Safeis, a safety firm of the cryptocurrency ecosystem, the money linked to crimes with cryptoactive reached 430.7 billion yuan (about 59,000 million dollars) in 2023, an increase of ten times compared to previous years. These confiscations generated record tax revenues, with 378,000 million yuan in 2024according to official data.

Companies such as Jiafenxiang, based in Shenzhen, emerge as key actors in this process. Documents reviewed by Reuters show that this company Liquidated more than 3,000 million yuan in cryptocurrencies seized, selling them on offshore platforms and repatriating the funds through local banks.

What to do with the millions seized in Bitcoin? A dilemma in China

Lawyers like Guo Zhihao, by Beijing Yingke Law Firm, believe that The Popular Bank of China must assume a central roleeither selling cryptocurrencies in international markets or creating a strategic reserve, similar to that raised by the Donald Trump government in the United States.

For his part, Winston Ma, former director of China Investment Corp, proposes to emulate the Hong Kong model, where digital assets are legal, allowing management to be centralized under a sovereign fund to maximize its value.

These ideas collide with the official position of China, which maintains a hard line against cryptocurrencies. However, the country faces a paradox. This is because, according to the River firm, China is already the 14th worldwide fork in Bitcoin due to confiscations, which forces it to rethink its strategy.

However, on-chain data analysis by Ki Young Ju, CEO of Cryptoquant, suggest that China could have liquidated the 194,000 Bitcoin confiscated in 2019 after dismantling the Ponzi Plustken scheme. These funds, moved through mixers and exchanges such as Huobi, would have sold without official government confirmation. This possible mass sale reinforces the paradox that, While China prohibits cryptocurrencies, its actions in global markets position it Like a key actor In the ecosystem, which could press towards a more open regulation in the future.

As Cryptonotics reported in February, the need for a clear regulatory framework to manage cryptoactive has been raised frequently, especially for judicial cases that involve issues of “national financial security.”

To achieve this, greater cooperation between regulators and judicial agencies is raised. Meanwhile, due to a decision taken in court, cryptocurrencies were recognized as “virtual goods” with property attributes, allowing their possession under certain conditions, although its use in commercial transactions remains illegal.