While US President Donald Trump has suspended tariffs with most countries, the tariff tension between the US and China is still unresolved.

This economic uncertainty has also led to an economic slowdown in China, with local governments in China liquidating cryptocurrencies seized through offshore private companies.

Faced with a revenue shortfall amid an economic slowdown, local Chinese governments are liquidating cryptocurrencies they seized in violation of the country's trade ban through private companies, Reuters reported.

Legal experts warn that this sales practice could lead to opaque processes and encourage corruption.

Since crypto trading is banned in China, local governments are reportedly using gray areas for crypto liquidation, according to Reuters.

Following these purges, legal experts, courts, and the financial industry have demanded clearer rules to address cryptocurrencies.

At this point, calls for cryptocurrencies to be officially recognized as assets have increased.

Chen Shi, a professor at Zhongnan University of Economics and Law, told Reuters that these sales were “a temporary solution that is not fully compatible with China's current ban on cryptocurrency trading.”

Reuters reported that local governments own around 15,000 Bitcoins.

According to Bitbo, China holds 194,000 BTC worth around $16 billion, making it the second-largest Bitcoin holder after the United States.

As crypto-related crimes and seizures increase, some experts have called on the Chinese central government to take over management of confiscated Bitcoin, potentially establishing a strategic crypto reserve for China.

*This is not investment advice.

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