China Could Sell $16 Billion Worth of Seized Bitcoin Despite National Ban

Local Chinese governments are reportedly liquidating confiscated cryptocurrencies via private firms, sidestepping the country's blanket ban on crypto trading and mining.

Local Chinese governments are reportedly liquidating confiscated cryptocurrencies via private firms, circumventing the country’s crypto trading and mining bans.

As reported by China’s Economic Times, the move is intended to help bolster government coffers amid mounting fiscal pressure. However, legal experts point out that such actions could invite corruption and further opacity.

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 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.

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.

However, legal experts are raising concerns over transparency and accountability, especially considering the covert nature of these crypto auctions which could foster backdoor deals and mismanagement, 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 is reportedly the second-largest national holder of Bitcoin globally, with around 190,000 BTC, lagging behind the U.S. which holds roughly 198,000 BTC.

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.