China’s Seized Bitcoin Sparks Debate Over Liquidation or Strategic Reserve
As China tightens its grip on crypto-related activity, local authorities are reportedly struggling to handle one particular issue: what to do with the growing stockpile of digital assets seized from criminal cases.
Despite a nationwide ban on crypto trading, some regional governments have been quietly liquidating confiscated assets through offshore channels. According to court records and documents cited in a Reuters investigation, these governments are enlisting private firms to convert Bitcoin and other cryptocurrencies into fiat currency—an effort to bolster public budgets.
The challenge lies in the legal gray area. With no standardized framework for dealing with seized crypto, each jurisdiction is left to its own interpretation. Legal experts warn that this patchwork approach could lead to mismanagement or corruption. At the end of 2023, local Chinese authorities were reportedly sitting on roughly 15,000 BTC—valued at $1.4 billion at the time.
Nationwide, China is estimated to hold around 194,000 BTC, placing it second only to the United States in terms of national Bitcoin holdings, according to data from Bitbo.
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Some within China’s legal and crypto communities believe a centralized solution is overdue. Suggestions include allowing the central bank to manage seized assets directly or creating a national crypto reserve. Others have floated the idea of setting up a sovereign crypto fund in Hong Kong, where crypto trading is legally permitted.
The issue has gained relevance amid a surge in crypto-linked crime—including money laundering, online scams, and gambling schemes—which saw over 3,000 individuals prosecuted in 2024 alone. Rising U.S.-China trade tensions have also pushed the crypto conversation back into the spotlight, with some analysts warning that capital flight into digital assets could increase if economic pressure continues.
As the U.S. moves to regulate stablecoins and expand its strategic use of Bitcoin, there’s growing speculation that China may eventually pivot from liquidation to accumulation—treating crypto not as a threat, but as a geopolitical asset.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
