China Launches Legal Sale of Seized Crypto via Hong Kong
Estimated reading time: 4 minutes
- China launches its first official process to sell seized cryptocurrencies through Hong Kong’s regulated exchanges.
- The move addresses previous legal ambiguities around the liquidation of government-held digital assets.
- As of 2025, China holds an estimated 194,000 Bitcoins, worth around $16 billion.
- The new system aims to enhance compliance, transparency, and revenue generation while maintaining a ban on private crypto trading.
- This initiative may serve as a regulatory model for other countries facing similar issues.
China has introduced its first official process for selling confiscated cryptocurrencies, using a partnership with Hong Kong’s regulated digital asset exchanges. The Beijing Municipal Public Security Bureau announced the new mechanism on June 5, 2025, marking a change in the management of government-held Bitcoin, where China is currently the world’s second-largest holder of such assets[1][2].
Although China has maintained a ban on cryptocurrency trading for several years, authorities have often come into possession of digital assets during enforcement actions targeting illegal activities. Previously, the liquidation of these assets was unclear under the law, with local governments sometimes selling seized tokens to supplement public finances in ways that did not align with the national ban and led to legal and ethical concerns[3][4]. As of the end of 2023, Chinese authorities held around 15,000 Bitcoins, valued at approximately $1.4 billion, into government reserves despite the prohibition[5]. By 2025, that figure had increased to an estimated 194,000 Bitcoins, worth as much as $16 billion, placing China behind only the United States in government-owned Bitcoin reserves[6].
The newly implemented approach allows mainland authorities to convert seized digital assets to cash through certified Hong Kong crypto exchanges, providing a clear legal method and addressing previous uncertainties[1][7]. This arrangement makes use of Hong Kong’s regulatory environment, which is more developed and flexible than that of the mainland. The collaboration is in line with Beijing’s ongoing ban on private crypto activity while enabling the government to access the value of confiscated assets.
The process is intended to achieve three main objectives. First, it establishes compliance by channeling sales exclusively through licensed Hong Kong platforms, meeting both mainland and Hong Kong regulatory standards[8]. Second, it increases transparency and public oversight compared to the previous system, where asset liquidation was fragmented and often lacked clarity[2]. Third, the mechanism helps China balance its ban on crypto trading with practical requirements such as asset recovery and revenue generation, without directly violating domestic laws[7][8].
Reflecting on earlier methods, Professor Chen Shi of Zhongnan University of Economics and Law stated: “While these sales helped raise funds, they were technically against China’s ban on crypto trading,” describing the past conflict between policy and practice[4].
China’s establishment of an official, cross-border process for selling seized cryptocurrencies could serve as a model for other countries with similar issues. The new system aims for regulation and transparency, while maintaining the existing restrictions on private crypto activity in mainland China.
- https://crypto.news/beijing-taps-hong-kong-to-liquidate-seized-crypto/
- https://www.caixinglobal.com/2025-06-06/hong-kong-offers-beijing-legal-route-to-sell-seized-crypto-102327918.html
- https://cryptobriefing.com/seized-crypto-liquidation-china/
- https://www.tronweekly.com/china-monetizes-digital-assets-fund-budget/
- https://www.tronweekly.com/china-monetizes-digital-assets-fund-budget/
- https://www.tronweekly.com/china-monetizes-digital-assets-fund-budget/
- https://cryptorank.io/news/feed/d9934-china-to-sell-seized-crypto-via-hong-kong
- https://cryptorank.io/news/feed/d9934-china-to-sell-seized-crypto-via-hong-kong