• Local Chinese governments are quietly liquidating seized crypto to fill public coffers strained by a slowing economy.
  • Experts warn of rising dependency and urge for centralized management, proposing a national crypto reserve like the U.S. Bitcoin strategy.

As crypto-related crime surges in China, with illicit cash flows hitting $59B in 2023, local governments have found a lucrative loophole: .

selling seized digital assets.

Despite a national ban on trading, regional authorities are partnering with private companies to offload confiscated coins — turning crime cleanup into fiscal opportunity. This gray-zone tactic injected 378 billion yuan into public finances last year, a 65% spike over five years. But as courts and law enforcement get overwhelmed, concerns mount that these digital windfalls are becoming budget crutches, distorting long-term financial planning.

Experts are calling for centralized oversight by China’s central bank and even propose a sovereign crypto reserve, echoing Trump’s Bitcoin reserve model in the U.S. Hong Kong's regulated model could offer a pathway, yet without national guidance, the current approach remains both profitable and precarious.