- Chinese authorities are using Hong Kong’s legal crypto exchanges to sell confiscated digital assets.
- Estimates suggest China holds tens of billions of dollars in seized cryptocurrency.
- Hong Kong will soon implement new stablecoin regulations to support secure digital payments.
- Officials in Hong Kong suggest stablecoins could help process international payments for China’s Belt and Road Initiative.
- The future structure of these payments depends on whether China uses global blockchain platforms or its own regulated networks.
Chinese law enforcement is liquidating seized cryptocurrency assets through licensed exchanges in Hong Kong, according to recent announcements and news reports. This approach helps mainland authorities bypass domestic restrictions while still complying with strict regulations.
Beijing’s police force directs the state-owned Beijing Equity Exchange (CBEX) to handle these assets, which are then sold on platforms licensed by the Hong Kong Monetary Authority (HKMA). So far, HKMA has authorized ten cryptocurrency exchanges, providing official transaction channels outside the Chinese mainland. Estimates suggest China’s confiscated crypto holdings reach tens of billions of dollars, though the exact amount remains unclear.
A report by Caixin highlights that this process contrasts with stricter disposal methods used in other countries. While China maintains a restrictive stance toward cryptocurrency trading, selling confiscated assets via Hong Kong offers a practical solution. The sales are handled through intermediaries, keeping the process regulated and transparent.
Separately, Hong Kong is preparing to enforce new rules for stablecoins—digital currencies pegged to traditional money—beginning in August. These regulations may support broader Chinese goals, such as facilitating international payments for the Belt and Road Initiative, a large-scale infrastructure project spanning multiple countries.
Last week, Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, stated in a radio interview that stablecoins could help with cross-border settlements on Belt and Road projects. As cited by the Hong Kong Economic Times, Hui noted these digital tokens could be especially useful in countries where local currencies are volatile. He said stablecoins could “break through existing bottlenecks in cross border payments.”
China already uses its own central bank digital currency (CBDC), the digital renminbi, for some international payments, including partnerships with the United Arab Emirates and participation in the mBridge cross-border payment platform. However, integrating new countries into these CBDC systems can take a long time, while stablecoin payments could start under Hong Kong’s new regulations.
A key decision ahead will be whether China conducts these stablecoin transactions on open global blockchains or opts for its own controlled network like the Blockchain-based Service Network (BSN). The BSN is China’s regulated blockchain platform, with versions designed both for domestic and international users. Its international project, led by Red Date Technologies, also has strong connections to Hong Kong.
The choice of blockchain infrastructure will affect how China’s Belt and Road digital payments move between countries—either using established global technology or China’s more tightly managed system.
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