Ru Haiyang, co-CEO of HashKey, Hong Kong’s largest licensed crypto exchange, suggested that China could follow the U.S. strategy by retaining forfeited Bitcoin as a strategic reserve, with the central government absorbing consolidating asset disposals. This idea aligns with discussions in China about managing its growing pile of seized cryptocurrencies, estimated to involve 430.7 billion yuan ($59 billion) in crypto-related crimes in 2023.
While China currently bans crypto trading and does not recognize digital tokens as legal assets, local governments have been selling seized coins through private companies to bolster public funds, a practice some experts argue conflicts with the trading ban. Proposals include centralized management, possibly through a crypto sovereign fund in Hong Kong or the central bank, to either sell assets overseas or hold them as a reserve, inspired by U.S. President Donald Trump’s Strategic Bitcoin Reserve initiative. However, no official confirmation of a policy shift has been made, and discussions remain speculative.
China’s current ban on crypto trading and non-recognition of digital assets as legal tender would face pressure for reform. Holding Bitcoin as a reserve could signal a softening of its anti-crypto stance, potentially leading to regulated crypto markets or limited legalization, especially in Hong Kong. A Bitcoin reserve could position China as a retrospective counterweight to the U.S., particularly if the latter pursues its Strategic Bitcoin Reserve.
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This could enhance China’s influence in global crypto markets and diversify its reserves away from traditional assets like U.S. Treasury bonds, hedging against dollar dominance. China’s entry as a state-level Bitcoin holder could drive significant price volatility and boost Bitcoin’s legitimacy as a global asset. It might trigger increased institutional adoption worldwide, but also raise concerns about market manipulation if China amasses substantial holdings.
Consolidating seized crypto under central government control (e.g., via the central bank or a Hong Kong-based sovereign fund) could streamline asset management but risks reinforcing state dominance over digital assets. It may also conflict with the decentralized ethos of cryptocurrencies, potentially deterring crypto innovators. Positioning Hong Kong as a crypto hub for managing these assets could solidify its status as a global financial center, attracting crypto businesses and talent. However, it might complicate Hong Kong’s regulatory alignment with mainland China’s stricter policies.
Selling or holding seized crypto could be seen as contradicting China’s trading ban, raising legal questions. Additionally, using forfeited assets for state purposes might spark debates about property rights and the ethics of those profiting from criminal proceeds. China’s move could prompt other nations to consider similar strategies, accelerating the race to integrate cryptocurrencies into national reserves. This might push for clearer international regulations but also heighten tensions over crypto governance.
These implications hinge on speculative policy changes, as no official plans have been confirmed. China’s cautious approach to crypto suggests any move would be carefully calculated to balance economic benefits with political control. The implications of China potentially adopting forfeited Bitcoin as a strategic reserve, as suggested by HashKey’s co-CEO, intersect with current U.S. crypto policies, which have taken a pro-crypto turn under the Trump administration in 2025. On March 6, 2025, President Trump signed an Executive Order establishing a Strategic Bitcoin Reserve, capitalizing it with Bitcoin forfeited through criminal or civil asset seizures.
The U.S. will not sell these assets, treating Bitcoin as a reserve asset to enhance national prosperity. Other agencies are evaluating their authority to transfer seized Bitcoin to this reserve. The order also explores a broader U.S. Digital Asset Stockpile, cryptocurrencies like Bitcoin, Ethereum, XRP, Solana, and Cardano, as announced by Trump on Truth Social. This move aims to position the U.S. as a leader in digital asset strategy. The U.S. policy mirrors China’s potential strategy of holding seized Bitcoin, signaling a global trend among major powers to legitimize cryptocurrencies as strategic assets. This could escalate competition, with both nations vying for influence over crypto markets and potentially driving Bitcoin’s price higher due to state-backed demand.
The U.S.’s proactive regulatory clarity contrasts with China’s crypto trading ban, potentially attracting global crypto businesses to the U.S. If China adopts a Bitcoin reserve without lifting its ban, it may struggle to compete for crypto innovation, reinforcing Hong Kong’s role as a crypto hub under U.S. influence. The SEC paused high-profile enforcement cases against crypto firms and rescinded Staff Accounting Bulletin 121, which had imposed costly accounting requirements on crypto custodians.
However, China’s centralized approach to managing seized assets may align with U.S. enforcement-driven seizures, raising ethical questions about state profiteering from criminal proceeds. Congress is prioritizing crypto legislation, with the Senate Banking Committee and House Financial Services Committee aiming for bills by August 2025. The GENIUS Act, progressed in March 2025, focuses on stablecoin compliance and collateralization, potentially boosting global demand for dollar-pegged stablecoins like USDC and USDT. The FIT21 Act, passed in 2024, laid initial market structure regulations, and debates continue over whether the SEC or CFTC should oversee crypto assets.
U.S. legislative momentum could set global standards, influencing China’s potential crypto reserve strategy. If China establishes a reserve without regulatory reform, it risks creating a disjointed policy that undermines investor confidence compared to the U.S.’s cohesive framework. The Trump administration opposes CBDCs, viewing them as threats to financial stability, privacy, and dollar sovereignty. Instead, it promotes dollar-backed stablecoins to enhance global liquidity and maintain dollar dominance.
China’s development of a digital yuan (CBDC) contrasts sharply with U.S. policy, potentially creating friction in global digital finance. A Chinese Bitcoin reserve could be a strategic hedge against U.S. stablecoin dominance, but it would require navigating its CBDC priorities. Both nations holding Bitcoin reserves could escalate a “crypto arms race,” with the U.S. leveraging its regulatory clarity and China its vast seized crypto holdings (from $59 billion in crypto-related crimes in 2023). This competition may drive Bitcoin’s price and adoption but risks market volatility if either nation manipulates its stockpile.
The U.S.’s pro-crypto policies could attract global talent and capital, pressuring China to loosen its trading ban or risk losing blockchain innovation to Hong Kong or Western markets. State-backed Bitcoin reserves in both countries could legitimize cryptocurrencies as reserve assets, akin to gold, boosting institutional adoption. However, the U.S.’s open blockchain stance contrasts with China’s centralized control, potentially fragmenting global crypto standards.
China’s potential reserve, if managed through Hong Kong, could integrate with U.S.-dominated stablecoin markets (90% of EU stablecoin market cap is USD-based), creating a complex interdependence. The U.S.’s shift to lighter regulation and innovation contrasts with China’s ban and centralized asset management. If China adopts a reserve without broader crypto reforms, it may face internal contradictions, as selling seized crypto violates its trading ban.
The U.S.’s SEC Crypto Task Force and legislative efforts could set a global benchmark, forcing China to clarify its stance to avoid isolation in digital finance. Both nations using seized crypto raises ethical questions about profiting from criminal proceeds. The U.S. estimates premature sales of seized Bitcoin cost taxpayers $17 billion, suggesting a motive to maximize value through reserves. China’s similar approach could face scrutiny for undermining its anti-crypto stance.
A U.S.-China race to amass Bitcoin could exacerbate wealth inequality, as state-driven price surges benefit early adopters while pricing out retail investors. If China channels its reserve through Hong Kong, it could leverage the city’s pro-crypto regulations (aligned with U.S. stablecoin markets) to compete indirectly with the U.S. However, this risks ceding control to a semi-autonomous region, complicating mainland policy.
Countries like Bhutan (11,000 Bitcoin) and the Central African Republic, which hold crypto reserves, may follow U.S. and Chinese leads, normalizing state crypto holdings. Brazil’s fintech Meliuz also proposed expanding Bitcoin reserves, indicating a trend. The U.S.’s push for technology-neutral regulations could clash with the EU’s MiCAR framework, which imposes bank-like rules on crypto. China’s potential reserve without regulatory reform may align more with authoritarian models, fragmenting global standards.
Dual U.S.-China reserves could stabilize Bitcoin’s perception as a store of value but risk manipulation if either nation dumps assets. Analysts predict Bitcoin could hit $500,000 under Trump’s policies, but China’s entry could amplify or disrupt this trajectory. U.S. crypto policies in 2025, with their focus on strategic reserves, regulatory clarity, and stablecoin promotion, position the U.S. as a crypto leader, directly influencing China’s potential Bitcoin reserve strategy. While both nations could drive crypto adoption, their divergent approaches—U.S. innovation versus Chinese control—may deepen geopolitical tensions and fragment global markets.