Beijing Slashes Red Tape: Seized Crypto Now Liquidated in 24 Hours via Hong Kong Exchanges
China's capital is turbocharging asset seizures—crypto now gets dumped on Hong Kong markets within a day. No more waiting for court orders or bureaucratic delays.
Hong Kong's exchanges become Beijing's liquidation backdoor. A slick workaround for a government that still pretends to hate crypto—while quietly using its infrastructure.
Bonus jab: Nothing unites regulators like the smell of fast liquidity. Suddenly, 'volatile' and 'unregulated' assets look mighty useful when the state needs cash.
China imposes Fresh Ban on Holding crypto Including Bitcoin
The Chinese government has announced a sweeping new ban that prohibits not just trading or mining of cryptocurrencies, but now extends to individual ownership of digital assets like Bitcoin, according to a report… pic.twitter.com/QO5RqqpnEC — CrowdFundJunction (Crypto VC) (@cfjcrypto) May 30, 2025
Beijing Police Formalize Digital Asset Disposal Framework
Under the system, the PSB entrusts confiscated digital assets to BEE, which selects third-party providers to conduct technical inspection, custody, and liquidation.
Digital assets are then sold via a compliant exchange in Hong Kong. The proceeds, after currency conversion and regulatory review, are transferred to the PSB and eventually routed to China’s national treasury.
The new process addresses the regulatory block that currently prevents the direct liquidation of cryptocurrencies within mainland China. It also builds on Beijing’s existing “green channel” for handling physically seized assets, which was established in 2017.
Authorities said the method was tested in a recent case handled by police in the city’s Shunyi District. The process, from asset custody to final remittance, was completed within 24 hours.
A reserve pricing system based on market consultation is used to mitigate volatility risks, and service providers must post a 110% performance bond. The entire workflow is subject to real-time oversight and digital recording.
Hong Kong as Regulatory Bridge for Mainland Crypto Operations
Legal training has also been expanded to include digital asset topics. Recent sessions have featured cold wallet protocols and blockchain tracing, with guest lecturers from academic institutions and technical agencies.
Mainland-based firms have increasingly turned to Hong Kong to manage regulatory constraints around digital assets. JD.com launched a stablecoin payment pilot using Hong Kong’s licensed infrastructure, part of a broader pattern of companies using the city’s clearer crypto rules to experiment with blockchain-based services.
The use of Hong Kong exchanges to liquidate seized crypto further demonstrates how mainland authorities are treating the city’s legal structure as an operational extension for handling digital assets. While this doesn’t indicate regulatory convergence, it reinforces Hong Kong’s role as a buffer zone where mainland entities can access functions that remain restricted at home.
Frequently Asked Questions (FAQs)
Could this model eventually be applied to civil or bankruptcy-related crypto disputes in China?While this mechanism was designed for criminal asset seizures, this structure might serve as a template for handling digital assets in broader legal contexts if the regulatory stance evolves.
What might other jurisdictions learn from Beijing’s outsourced disposal model?For countries that ban domestic crypto trading but encounter digital assets in enforcement cases, the use of proximate, regulated offshore centers like Hong Kong could offer a legal workaround without revising Core policy positions.
Who selects the compliant exchanges used in Hong Kong?The Beijing Equity Exchange appoints third-party service providers, who are responsible for custody and liquidation via licensed Hong Kong exchanges.
