As per a Reuters report, provincial Chinese governments have been converting seized cryptocurrencies into cash through private firms, notwithstanding the current crypto trading ban enforced in mainland China. This maneuver is perceived as a strategy to augment public funds amidst a decelerating economy.
Reuters revealed on Wednesday that these cryptos are typically confiscated from illegal activities. Experts in law have expressed concerns over this approach, suggesting it could engender non-transparent procedures and encourage corruption. The report was based on court and transaction documents.
While cryptocurrency trading and mining are still prohibited in mainland China, Hong Kong has continually declared its objective to evolve into a crypto center with a licensing scheme for trading. Despite the restrictions, the Chinese government has employed local businesses to aid in the disposal of seized crypto assets. Though individual crypto trading is illegal, running a company that aids the government in cryptocurrency disposal is still allowed, attracting more and more participants.
For instance, Jiafenxiang, a tech company based in Shenzhen, has aided the sale of cryptocurrencies worth more than 3 billion yuan ($408 million) in offshore markets since 2018 on behalf of several local governments in Jiangsu province, including the cities of Xuzhou, Hua’an, and Taizhou, as per the report.
Transaction records mentioned by Reuters indicate that the proceeds in U.S. dollars were first converted to yuan via local banks before being moved to regional finance bureau accounts. As per BitcoinTreasuries.net data, China holds approximately 190,000 BTC, making it the world’s second-largest national bitcoin holder, with the U.S. leading with 198,012 BTC.
The handling of crypto in legal cases has become an important issue in China’s judicial system, leading to numerous seminars on the topic. In February, a seminar was held in Beijing where representatives from the Supreme People’s Court discussed research studies and the legal treatment of cryptocurrency with other top judiciary authorities and universities.
In its latest annual financial stability report, the PBOC, China’s central bank, emphasized crypto regulation and mentioned it is refining an international regulatory framework for crypto assets.
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