China has long taken a firm stance against cryptocurrency. From banning crypto exchanges to outlawing mining, the country has worked hard to keep digital assets out of its financial system. But here’s the twist: Chinese authorities are now sitting on a growing pile of crypto and no one seems quite sure what to do with it.
These digital assets haven’t been bought or traded by the government. They’ve been seized. As police crack down on crypto scams, money laundering schemes, and fraud, more and more crypto ends up in government hands. We’re talking millions of dollars’ worth of Bitcoin, Ethereum, and other tokens.
So, what happens next?
That’s the big question.
While China officially bans crypto activity, local governments are reportedly working with private companies to help sell off some of these seized assets. These partnerships are flying under the radar, raising legal and ethical concerns. Can the government sell something it says is illegal? And who exactly is benefiting from these sales?
This patchwork approach is now putting pressure on Beijing to act. Legal experts and economists are calling for a national strategy, suggesting the central bank, the People’s Bank of China to take control. Some even believe China should create a state-run crypto reserve to manage and possibly hold onto these assets, like the U.S is proposing with its Strategic Bitcoin Reserve.
Of course, that would be a huge shift. China has always been wary of the risks crypto poses to its tightly controlled financial system. But as the global crypto market matures and as other governments start to embrace blockchain assets — China may need to rethink its playbook.
Right now, there’s no official word on a new policy. But with the value of these seized digital wallets climbing, and with international eyes watching, China won’t be able to kick this can down the road for much longer.
Whether it chooses to liquidate, regulate, or even hold, one thing is clear: China’s crypto decisions are going to send ripples far beyond its borders.