China’s Unexpected Turn Toward Digital Assets
Once upon a time, China was the heartbeat of the global crypto world, home to the biggest miners, traders, and exchanges. But everything changed in 2021, when the government slammed the brakes, banning cryptocurrency trading and mining altogether. Overnight, the empire of digital coins crumbled, and the U.S. took the lead.
Fast-forward four years, and something surprising is happening. China might be warming up to crypto again but not for the reasons you’d expect.
The country has been seizing a growing number of cryptocurrencies from criminal cases. But with no clear rules on what to do with these digital assets, things are getting messy. Local governments have been quietly cashing in, selling the coins overseas for U.S. dollars, then converting the money into yuan to support their struggling economies.
One small tech firm, Jiafenxiang, has already sold over $41 million worth of crypto for three cities—Xuzhou, Hua’an, and Taizhou since 2018. But not everyone thinks this is the right way to go. Experts say the process lacks transparency, and some even argue it breaks China’s own rules against crypto trading.
Now, more voices inside China—lawyers, law enforcement, and financial insiders are asking for a change. They want crypto to be recognized legally as property. Some are even calling for the creation of a government crypto reserve, similar to strategies seen in other countries.
The big question is: how much crypto does China really hold? Some say it’s as much as 194,000 bitcoins worth over $16 billion—mostly from cracking down on scams like PlusToken. Others think it’s much less, around 15,000 bitcoins.
While mainland China stays cautious, its neighbor Hong Kong is moving full speed ahead, launching crypto ETFs and licensing exchanges. Could the mainland follow suit?
Maybe. Giving legal status to crypto assets could be the first step in a bigger shift. One thing’s for sure: in a world racing toward digital finance, China seems to be slowly, but surely, finding its way back into the game.