Main to remember
- Chinese local governments sell cryptographic assets seized to support public finances in the midst of an economic slowdown.
- It is estimated that 15,000 bitcoins worth 1.4 billion dollars were detained by Chinese local governments by the end of last year.
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Chinese authorities operate private companies to sell cryptographic assets seized with illegal activities to consolidate public finances in the processing of economic winds, according to a new Reuters report, citing transactions and court documents they have examined.
The practice comes in the middle of an increase in digital crimes related to assets and takes place in a regulatory gray area, because the ban on cryptographic trade is fully applied since September 2021.
As indicated, these transactions have channeled millions of dollars in municipal budgets tense by the drop in growth and mounting expenses.
However, the trend has exposed a regulatory vacuum. In China, there are no unified national rules on how to manage or have digital assets seized in cases involving fraud, money laundering, online game, as well as other illicit activities.
Chen Shi, professor of law at the Zhongnan University of Economy and Law, said that the current approach is a bypass by patchwork and “not entirely in accordance with the ban on cryptographic trading of China”.
Fearing that this could create corruption opportunities and potentially embedded criminals, legal experts, judges and law enforcement officials have called for urgent reform.
According to River, the end of 2024, China had nearly 15,000 bitcoins, valued at around $ 1.4 billion at the time.
Despite the national negotiation prohibition, a large part of these assets was converted into cash using private companies that transginate on foreign cryptography scholarships.
The sale of crypto via offshore exchanges and peer platforms is a common method that users have adopted to bypass the existing prohibition. Traders on the continent have used social media, VPNs and various payment methods to maintain their activities outside the scope of the application of regulations.
Jiafenxiang, based in Shenzhen, has sold more than 3 billion yuan ($ 410 million) in crypto since 2018 in the name of several cities in eastern China, according to the report. The dollar product was converted to Yuan and transferred directly to local financial offices, bypassing national negotiation restrictions.
Some law professionals have called upon the central bank to assume the responsibility of managing the assets of entered, pleading for offshore sales or a national reserve, reflecting the Plans of the Trump era for an American bitcoin reserve.
The rumors of the Chinese government are working quietly on a Bitcoin strategic reserve in response to changes in the regulation of American cryptographs.
The 2021 ban was the culmination of China’s efforts to curb what he considers as speculative financial activities and to prevent capital flight, as huge quantities of crypto were used to keep money from China away.
Since the ban, China has focused on the development of its own digital currency supported by the State, the Digital Yuan (E-CNY), which is intended to provide a controlled digital payment system without the risks associated with the decentralized crypto.
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