- China will sell seized cryptocurrency through licensed exchanges in Hong Kong for the first time.
- The initiative uses the China Beijing Equity Exchange (CBEX) and follows a formal agreement with the Beijing Municipal Public Security Bureau.
- Proceeds from the sales will be converted into U.S. dollars and held in a dedicated state account before being moved to the national treasury.
- The new process aims to ensure transparency, prevent corruption, and comply with anti-money laundering rules.
- Hong Kong serves as a regulated digital asset hub, providing a legal and secure channel for these transactions despite China’s crypto ban.
Law enforcement authorities in China have announced a new policy to sell confiscated cryptocurrency using licensed exchanges in Hong Kong. The process will be handled by the state-owned China Beijing Equity Exchange (CBEX) in cooperation with the Beijing Municipal Public Security Bureau. This marks China’s first official system for disposing of digital assets, developed in response to the mainland’s ongoing ban on cryptocurrency trading.
According to official figures, China seized digital assets totaling approximately $60 billion in 2023, a twelve-fold increase from 2022. Authorities reportedly hold roughly 194,000 Bitcoin and 833,000 Ethereum, placing the country among the largest state holders of cryptocurrency in the world. The formal sales system will use third-party agencies, selected by CBEX, to carry out transactions through licensed Hong Kong exchanges with stringent anti-money laundering (AML) controls.
A security deposit of 110% of the asset value will be required from participating agencies to enhance transparency during the sale process. Funds from sales will be held in a dedicated account and then transferred to the state treasury. The agencies will also follow strict audit procedures to maintain a transparent record of all transactions.
Previously, local governments disposed of seized crypto assets through private offshore companies, which raised concerns about legal ambiguity and corruption. The new official framework is intended to address these concerns by standardizing the process and improving oversight. Experts have noted this system centralizes management of confiscated assets and could optimize financial recovery for the state.
Hong Kong is positioned as a key player due to its regulatory framework that supports licensed digital asset exchanges, as required by its Securities and Futures Commission. Major platforms such as OSL and HashKey operate under these regulations. Hong Kong has also passed the Stablecoins Bill and expanded licensing for digital assets, reinforcing its status as a digital financial hub.
Some experts suggest that this new system may serve as a model for other countries facing similar challenges with seized digital assets, as it provides a legal, transparent method for liquidation while respecting national legal prohibitions. This approach allows China to access global crypto liquidity through Hong Kong without violating its own regulations.
The volume of seized digital assets in China continues to grow, making this policy change a significant development in how governments can interact with the crypto economy while retaining control over regulatory compliance and financial oversight.
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