China has announced plans to sell seized digital assets through a licensed exchange in Hong Kong. The initiative is working with China Beijing Stock Exchange (CBEX) to manage digital assets seized in criminal cases. In line with this, CBEX attracts third-party agents to help sell assets on regulated exchanges.
Reports show that digital assets seized from criminal proceeds will be converted into originals and deposited in designated accounts. This is the first time that mainland China has implemented a process to dispose of seized digital assets.
This development is possible as Hong Kong is recognized as a hub for digital assets. Mainland China has chosen to enforce a ban on crypto transactions and related activities.
China’s crypto disposal process shows the size of seized assets
A recent framework represents the first time that a formal process will continue to follow to ensure the disposal of the massive amounts of forfeitured digital assets that have been accumulated since China announced the crypto ban.
The value of digital assets awaiting disposal by Chinese authorities exceeded billions of dollars by the end of 2022, and increased to 4000.7 billion yuan ($60 billion) in 2023, according to authorities.
This trend coincides with the global cryptocurrency seizure trend, with some countries currently holding vast digital assets from seizure and fraud investigations.
Reports show that the US currently holds around 200,000 bitcoin, equivalent to $16 billion in seized assets, while the UK holds over 61,000 bitcoin in seized assets. China reportedly owns around 194,000 Bitcoin and 833,000 Ethereum, placing the country among the world’s top holders.
The Chinese government continues to be ranked as one of the highest holders in the world despite the property ban. A few days ago, news was filtered online, and China has noticed that individuals are banning ownership of digital assets. The news has not been confirmed by official channels, but the country has banned assets dating back to 2013. This prohibits the National Bank (PBOC) from national banks from engaging in Bitcoin-related businesses.
Hong Kong deepens its position as a cryptocurrency hub
The amount of seized assets presents challenges to the authorities, and development is also seen as an opportunity for them. There is concern when market balances abandon the size of assets seized by the market, but they are being asked to quickly turn seized illegal profits into legal state resources that benefit citizens.
Meanwhile, Beijing’s decision to liquidate assets through Hong Kong’s exchange reveals a dual approach to digital asset regulation from territories within China. It also establishes Hong Kong’s position as a cryptocurrency hub. Over the past few years, the region has positioned itself as a global hub for digital assets as China has maintained its strict crypto ban. Since at least 2017, the country has cracked down on exchanges, ICOs and mining.
Additionally, Chinese officials were spotted at Crypto Events in Hong Kong, allowing the city to develop as a test site for digital asset policies that the mainland is not ready to adopt or implement. With this arrangement, Beijing will investigate the potential of cryptocurrency through Hong Kong’s regulated sandboxes while administering the mainland’s financial system.
The partnership between the parties opens formal channels between China’s strict control and the global crypto economy, setting precedents in other regions with restrictive crypto policies.
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