Local Chinese governments are reportedly liquidating confiscated cryptocurrencies via private firms, sidestepping the country’s blanket ban on crypto trading and mining.
According to the information these sales are intended to bolster government coffers amid mounting fiscal pressure — a move that legal experts warn could invite corruption and further opacity.
Seized Crypto, Sold Offshore
While crypto trading remains illegal for individuals in mainland China, local authorities have found a legal gray area. Government-commissioned private companies have been tasked with selling seized digital assets on offshore platforms. In doing so, they convert crypto into U.S. dollars, then yuan, before channeling funds into regional finance accounts.
A prime example is Shenzhen-based tech firm Jiafenxiang, which has reportedly handled over 3 billion yuan (approximately $408 million) in crypto transactions since 2018. The company worked on behalf of local governments in cities like Xuzhou, Hua’an, and Taizhou, the report notes.
Legal Loopholes and Growing Risks
Though it’s illegal for individuals in China to trade or hold cryptocurrency, operating a business that assists the government in liquidating digital assets is still allowed. As a result, a growing number of firms are seeking to enter this niche space — raising concerns over transparency and accountability.
Legal experts warn that the covert nature of these crypto auctions could foster backdoor deals and mismanagement, particularly given the lack of clear legal oversight or public disclosures.
Mainland Ban, Hong Kong Ambition
The irony is stark. While mainland China enforces one of the world’s strictest crypto crackdowns, its financial hub Hong Kong is positioning itself as a global crypto center — complete with a regulatory framework and licensing system.
Yet, even with the official ban in place, China reportedly remains the second-largest national holder of Bitcoin globally, with around 190,000 BTC, just behind the U.S. which holds roughly 198,000 BTC, according to BitcoinTreasuries.net.
This dual-track approach continues to blur the lines between prohibition and pragmatism, with Chinese authorities enforcing crypto bans at the retail level while still finding ways to profit from the sector behind the scenes.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
Source: https://coindoo.com/china-could-sell-16-billion-worth-of-seized-bitcoin-despite-national-ban/