China selling seized crypto to top up coffers as economy slows: Report
Local governments in China are reportedly seeking ways to offload seized crypto while facing challenges due to the country’s ban on crypto trading and exchanges.
The lack of rules around how authorities should handle seized crypto has spawned “inconsistent and opaque approaches” that some fear could foster corruption, lawyers told Reuters for an April 16 report.
Chinese local governments are using private companies to sell seized cryptocurrencies in offshore markets in exchange for cash to replenish public coffers, Reuters reported, citing transaction and court documents.
The local governments reportedly held approximately 15,000 Bitcoin (BTC) worth $1.4 billion at the end of 2023, and the sales have been a significant source of income.
China holds an estimated 194,000 BTC worth approximately $16 billion and is the second largest nation Bitcoin holder behind the US, according to Bitbo.
Zhongnan University of Economics and Law professor Chen Shi told Reuters that these sales are a “makeshift solution that, strictly speaking, is not fully in line with China’s current ban on crypto trading.”
Countries and governments that hold BTC. Source: Bitbo
The issue has been exacerbated by a rise in crypto-related crime in China, ranging from online fraud to money laundering to illegal gambling. Additionally, the state sued more than 3,000 people involved in crypto-related money laundering in 2024.
China crypto reserve floated as solution
Shenzhen-based lawyer Guo Zhihao opined that the central bank is better positioned to deal with seized digital assets and should either sell them overseas or build a crypto reserve.
Ru Haiyang, co-CEO at Hong Kong crypto exchange HashKey, echoed the suggestion saying that China may want to keep forfeited Bitcoin as a strategic reserve as US President Donald Trump is doing.
Related: Bitcoin rebounds as traders spot China ‘weaker yuan’ chart, but US trade war caps $80K BTC rally
Creating a crypto sovereign fund in Hong Kong, where crypto trading is legal, has also been proposed.
This issue has gained attention amid rising US-China trade tensions and Trump’s plans to regulate stablecoins and foster growth and innovation in the crypto industry.
Several industry observers have suggested that China’s tariff response could result in a devaluation of the local currency, which may result in a flight to crypto.
Magazine: Illegal arcade disguised as … a fake Bitcoin mine? Soldier scams in China: Asia Express
The European Union is considering a partial halt to its landmark artificial intelligence laws in response to pressure from the US government and Big Tech companies.
The European Commission plans to ease part of its digital rulebook, including the AI Act that took effect last year, as part of a “simplification package” that is to be decided on Nov. 19, the Financial Times reported on Friday.
If approved, the proposed halt could allow generative AI providers currently operating in the market a one-year compliance grace period and delay enforcement of fines for violations of AI transparency rules until August 2027.
“When it comes to potentially delaying the implementation of targeted parts of the AI Act, a reflection is still ongoing,” the commission’s Thomas Regnier told Cointelegraph, adding that the EC is working on the digital omnibus to present it on Nov. 19.
EU’s AI Act entered into force in August 2024
The commission proposed the first EU AI law in April 2021, with the mission of establishing a risk-based AI classification system.
Passed by the European Parliament and the European Council in 2023, the European AI Act entered into force in August 2024, with provisions expected to be implemented gradually over the next six to 36 months.
According to the FT, a bulk of the provisions for high-risk AI systems, which can pose “serious risks” to health, safety or citizens’ fundamental rights, are set to come into effect in August 2026.
With the draft “simplification” proposal, companies breaching the rules on the highest-risk AI use could reportedly receive a “grace period” of one year.
Related: EU mulls SEC-like oversight for stock, crypto exchanges to bolster startup landscape
The proposal is still subject to informal discussions within the commission and with EU states and could still change ahead of its adoption on Nov. 19, the report noted.
“Various options are being considered, but no formal decision has been taken at this stage,” the EC’s Regnier told Cointelegraph, adding: “The commission will always remain fully behind the AI Act and its objectives.”
“AI is an incredibly disruptive technology, the full implications of which we are still only just beginning to fully appreciate,” Mercuryo co-founder and CEO Petr Kozyakov said, adding:
“Ultimately, Europe’s competitiveness will depend on its ability to set high standards without creating barriers that may risk letting innovation take place elsewhere.”
The EU’s potential suspension of parts of the AI Act underscores Brussels’ evolving approach to digital regulation amid intensifying global competition from the US and China.
After the US explicitly banned central bank digital currency (CBDC) development in early 2025, the European Central Bank accelerated work on the digital euro but later said that digital cash would not launch before 2029.
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