- China quietly sells seized Bitcoin, raising questions about its true stance on crypto markets.
- Private companies are used by local governments to sell Bitcoin that has been seized.
- This might have an impact on international markets and set a standard for other nations.
Despite enforcing a nationwide ban on cryptocurrency trading in 2021, China is now turning heads globally by selling off seized Bitcoin — a move that contradicts its public stance and raises serious questions about its true involvement in the crypto market. Reports backed by court documents and transaction records reveal that local Chinese governments are quietly using private enterprises as intermediaries to offload their confiscated Bitcoin on offshore markets. This covert strategy appears designed to funnel revenue back into government coffers, effectively bypassing the very regulations they once imposed.
Lack of Clear Regulations and Growing Concerns
Experts have flagged the lack of clear guidelines in handling the seized crypto assets. “There is no specific uniform case under which local governments operate when it comes to resolving local asset disposals,” sources remarked, raising concerns over potential corruption and regulatory inconsistency.
Explaining that these disposals are a makeshift solution, Professor Chen Shi of Zhongnan University of Economics and Law, stated that the disposals are not fully in line with China’s current ban on crypto trading.” While these actions technically violate China’s stance on cryptocurrencies, they continue to be carried out by local governments to replenish their budgets. At the end of 2023, China’s local governments were said to hold 15,000 Bitcoins, worth $1.4 billion, making the country one of the largest holders of Bitcoin globally.
China’s Global Bitcoin Influence and Precedents for Other Nations
The big question arising from these actions is whether China is testing how much influence it still holds over the global Bitcoin market. China’s choice to trade seized Bitcoin was interpreted by some as an attempt to manipulate market dynamics. Some speculate that a huge sell-off would lead to a market dump and further depress Bitcoin prices.
China’s involvement with Bitcoin also raises the possibility of setting a precedent for other countries dealing with confiscated digital assets. With the global crypto market coming under greater scrutiny against the backdrop of rising tensions between the U.S. and China, other nations might consider various options for dealing with seized cryptocurrencies. Some analysts stated that China could leverage the holding of forfeited Bitcoin as a strategic reserve, a suggestion made by HashKey’s co-CEO Ru Haiyang from Hong Kong.
Related: China and Russia Use Bitcoin for Energy Trade Settlements
Bitcoin’s OI-Weighted Funding Rate Shows Market Volatility and Stabilization
According to Coinglass data, Bitcoin’s OI-weighted funding rate has experienced notable fluctuations. A sharp spike occurred on January 22, coinciding with a significant increase in Bitcoin’s price. Since then, the funding rate has shown a series of ups and downs, reflecting ongoing market volatility. As of mid-April, the funding rate appears to be stabilizing, suggesting a calmer market environment.
It is also in concord with several speculations derived earlier that actions taken by China, such as selling selloffs with held Bitcoin, could have an invariable impact upon Bitcoin’s price dynamics and fund rates.
