China has announced plans to sell seized digital assets through licensed exchanges in Hong Kong. The initiative is in collaboration with the China Beijing Equity Exchange (CBEX) to manage digital assets seized in criminal cases. In line with this, CBEX will engage third-party agencies to help sell the assets on regulated exchanges. According to reports, the digital assets seized from criminal proceeds will be converted into yuan and deposited into designated accounts. This is the first time a mainland Chinese agency will be carrying out a process to dispose of seized digital assets. This development is possible because Hong Kong is recognized as a digital asset hub, with mainland China still choosing to enforce its ban on crypto trading and related activities. China’s crypto disposal process shows the scale of seized assets The recent framework represents the first time a formal process is being followed to ensure the handling of a large amount of confiscated digital assets that have been accumulated since China announced its crypto ban. According to authorities, the value of the digital assets awaiting disposal by the Chinese authorities exceeded several billion dollars by the end of 2022, with the amount jumping to 430.7 billion yuan ($60 billion) in 2023. The figure is a twelvefold increase from the previous year. The trend aligns with that of the global cryptocurrency seizures, with several countries now holding a huge chunk of digital assets from seizures and fraud investigations. According to reports, the United States presently holds about 200,000 Bitcoins worth $16 billion in seized assets, while the United Kingdom holds more than 61,000 Bitcoins in seized assets. China reportedly holds about 194,000 Bitcoins and 833,000 Ethereum, putting the country among the top holders in the world. The Chinese government continues to rank as one of the highest holders globally despite its ban on the asset. Some days ago, news filtered onto the internet noting that China has banned private individuals from owning digital assets. While the news has not been confirmed by official channels, the country still has a ban on assets dating back to 2013, when the People’s Bank of China ( PBoC ) prohibited banks in the country from engaging in Bitcoin-related businesses. Hong Kong deepens its status as a cryptocurrency hub The amount of seized assets has presented a challenge to the authorities, with the development also seen as an opportunity for them. While there are concerns about the market balance should they dump that size of seized assets on the market, there have been calls for them to quickly turn the seized illicit gains into legitimate state resources that will benefit the citizens. Meanwhile, Beijing’s decision to liquidate the assets through Hong Kong exchanges reveals a dual approach to digital asset regulation from territories inside China. It also establishes Hong Kong’s status as a cryptocurrency hub. Over the last few years, the area has been positioning itself as a global hub for digital assets as China continues to maintain its strict crypto ban. The country has been cracking down on exchanges, ICOs, and mining since at least 2017. Furthermore, there have been sightings of Chinese officials at crypto events in Hong Kong, allowing the city to develop as a testing ground for digital asset policies that the mainland isn’t ready to adopt or implement. This arrangement ensures Beijing controls the financial systems in the mainland while exploring the potential of cryptocurrencies through its regulatory sandbox in Hong Kong. The partnership between both parties also opens a formal channel between China’s strict control and the global crypto economy, setting a precedent for other areas with restrictive crypto policies. Your crypto news deserves attention - KEY Difference Wire puts you on 250+ top sites
