Chinas Authorities Turn to Private Firms for Selling Confiscated Cryptocurrencies to Boost Budget

Local authorities in China are enlisting private companies to liquidate confiscated cryptocurrencies overseas, aiming to boost their budgets. This information comes from transaction and judicial documents reported by Reuters.

The lack of clear guidelines regarding how officials should handle seized cryptocurrencies has resulted in «inconsistent and opaque practices.» Legal experts have expressed concerns that this could pave the way for corrupt schemes, as noted by the agency.

The sale of digital assets has emerged as a substantial revenue source, with local authorities reportedly holding around 15,000 BTC (approximately $1.4 billion) by the end of 2023.

Currently, Bitbo estimates that Chinese officials have access to around 194,000 BTC (about $16.3 billion), placing the country just behind the United States, which holds 207,189 BTC (approximately $17.37 billion).

In an interview with the agency, Chen Shi, a professor at Zhongnan University of Economics and Law, explained that the actions of the authorities «do not fully align with the existing ban on cryptocurrency trading.»

The situation is further complicated by the rise in crimes associated with digital assets, ranging from online fraud and illegal gambling to money laundering. In the past year, courts have begun addressing over 3,000 cases related to the legalization of illicit gains.

Experts interviewed by Reuters suggest that either selling the cryptocurrencies or accumulating them in a special reserve, akin to proposals made in the US, would be prudent.

Additionally, specialists do not rule out an increased focus by authorities on digital assets due to the potential for capital flight amid the ongoing trade war.

It is worth noting that former BitMEX CEO Arthur Hayes stated that new US tariffs could trigger a shift of funds from the Chinese yuan (CNY) into Bitcoin.