tl;dr
China is considering a nationwide policy to manage cryptocurrencies seized from criminal activities, as regional disposal practices vary and raise concerns about misuse. In 2023, crypto-related crimes in China surged to $59 billion, with over 3,000 prosecutions for money laundering. Local government...
China is currently debating a national policy to standardize the handling of approximately $59 billion in cryptocurrencies seized from criminal activities. This move comes amid a significant surge in crypto-related crimes and inconsistent local disposal practices across the country.
In 2023 alone, crypto-related offenses in China skyrocketed to $59 billion, with over 3,000 prosecutions centered on money laundering. Local governments have been treating seized cryptocurrencies as property, usually liquidating these assets via private firms. This practice has raised concerns about regulatory gaps and corruption risks due to the lack of uniform oversight.
There is an ongoing debate about adopting a centralized reserve model for these assets, akin to a recent proposal in the United States. Under this model, confiscated digital assets would not be immediately sold but instead retained by the central government as part of a national strategic reserve. Such a policy would mark a significant shift and align China more closely with emerging international trends of treating cryptocurrencies as strategic resources rather than disposable commodities.
Currently, local disposal practices are fragmented. For example, some third-party companies like Shenzhen-based Jiafenxiang have sold billions in cryptocurrencies on behalf of municipal governments, but operate under a regulatory gray area. Legal advisors have noted the lack of clear rules overseeing these third parties, further complicating transparency.
This policy shift discussion highlights China’s growing recognition of the strategic importance of digital assets and its efforts to create more consistent and controlled management of seized cryptocurrencies amid the expanding scale of crypto crime.