Chinese officials are advocating for regulations to legally recognise cryptocurrencies amidst an economic slowdown. Local governments have sold seized crypto assets for cash, despite an overarching trading ban. While Hong Kong pushes to become a cryptocurrency hub, reports on China’s holdings present conflicting figures. The potential for legal recognition of cryptocurrencies is viewed as a crucial development for the industry’s future in China.
Chinese officials are advocating for regulatory frameworks that would legally recognise cryptocurrencies, primarily to manage assets seized during criminal investigations. Despite the ongoing ban on crypto trading within mainland China, some local governments have reportedly been liquidating seized crypto assets via private companies to generate revenue amid an economic decline. This practice involves selling these assets for U.S. dollars, which are subsequently converted to yuan and allocated to public funds.
The current approach to handling these seized crypto assets is considered inconsistent and lacks transparency, which has raised concerns regarding potential corruption. The discussions among officials include establishing robust guidelines or maintaining a strategic reserve similar to that used in the U.S. Such measures could enhance clarity and promote greater acceptance of cryptocurrencies within the regulatory framework.
The extent of cryptocurrency holdings by the Chinese government varies considerably between sources, creating confusion. Bitbo Treasuries estimates that China holds 194,000 BTC, valued at over $16 billion, mainly derived from the PlusToken scam. In contrast, Bitcoin investment firm River claims that only 15,000 BTC, worth about $1.4 billion, are held by the government, highlighting the discrepancy in reported figures.
Analysts suggest that China may have already disposed of some Bitcoin assets acquired from the PlusToken Ponzi scheme, contributing to divergent perceptions of its standing in Bitcoin holdings. Meanwhile, Hong Kong seeks to establish itself as a global cryptocurrency hub by approving cryptocurrency exchange-traded funds and providing business licenses for several exchanges. The future path for mainland China regarding cryptocurrency remains uncertain, but legal recognition could significantly impact the industry.
