China's relationship with Bitcoin has always been complicated. A tornado courtship preceded by a quick, emphatic separation. As with any complicated break-up, the details are still tangled. In this instance, those loose ends are millions, possibly billions, of dollars’ worth of seized cryptocurrency.

The question now isn't whether China likes Bitcoin, but what it's going to do with all that confiscated digital gold. And that, my friends, is where the magic happens. The current situation is unsustainable. This absence of clear-cut rules opens the door to favoritism and corruption, warps global markets and, frankly, makes China appear wishy-washy on the international scene.

So why is regulation not only likely, but actually inevitable? Let's dive in.

1. Corruption's Open Invitation

Without clear rules, China’s confiscated Bitcoin is rapidly turning into a honey pot for corruption. This isn’t Dallas- or waterfront-problem conjecture, it’s human nature 101. Imagine a scenario: a local official tasked with managing millions in Bitcoin. No guidance, no clear legal precedent, and a fuzzy idea of the (illegal) technology in question. You mean to say that nobody would be encouraged to divert a bit of that money for themselves. To "misplace" a few coins?

This isn't just about lining pockets. It's about power. Control of these assets translates to influence. Who gets access to the Bitcoin? Who decides when and how it's sold? These decisions have the power to make or break empires. In the right hands, however, they can curb unhelpful dissent or inappropriately over-reward loyalty.

Think about it like this: It's like leaving a stack of unmarked bills in a room full of people with varying degrees of integrity and expecting everyone to walk away empty-handed. History teaches us that doesn't happen. The larger the hold, the larger the lure. This opacity in the management of these seized assets fosters a culture of corruption and misconduct. China knows more than full well that this is the case.

2. Market Instability Is Contagious

Let's be blunt: a massive Bitcoin dump by the Chinese government could send shockwaves through the entire crypto market. Together we can prevent a major upward price correction. This would undermine investor confidence and set a troubling precedent for other countries pursuing experiments of their own with Bitcoin as a reserve asset.

Consider the potential scenario: China decides to liquidate its holdings to prop up local economies strained by current economic headwinds. A seemingly rational decision, right? Yet what if that one step sets off a reverse domino effect, pushing other countries to reconsider their own crypto approaches. What if that’s what these spot bitcoin ETF approvals trigger — a massive global sell-off and an extended global bear market?

The implications are far-reaching. It isn’t only about how high Bitcoin’s price goes, or low for that matter, it’s about creating the perception that cryptocurrency is a credible asset class. And China, intentionally or not, has most of the power when it comes to shaping that perception. To ignore this potential market impact is not only irresponsible, it’s economically short-sighted.

This situation mirrors the gold market in the 1970s when governments attempted to manipulate prices. The result? Chaos and volatility. China needs to learn from history. A blind, knee-jerk approach to Bitcoin disposal will just make it worse. Regulation creates a system of checks and balances that offer boundaries for responsible innovation and help protect against market manipulation.

3. Hypocrisy Undermines Authority

This is perhaps the most compelling reason. Most recently in September 2021, China once again banned Bitcoin trading, claiming risks to financial stability and anti-money laundering purposes. Today it finds itself on top of a crypto fortune’s worth of seized Bitcoin. As such, how could China credibly continue its anti-crypto posture while at the same time overseeing (and perhaps cashing in on) a huge Bitcoin holding?

The optics are terrible. It reeks of hypocrisy. It serves to weaken China’s own position on the global stage, while undermining its authority as an arbiter of global financial regulation. It opens the door for critics to accuse China of selectively enforcing its own rules, depending on what benefits the state.

Imagine the hypocrisy of someone going around preaching the dangers of gambling while playing poker every evening on the down-low. Eventually, people will see through the charade. And today, in the era of social media, that facade will be uncovered, picked apart, and laughed at.

China should provide a transparent and predictable regulatory landscape. This framework needs to be public and detail how they plan to seize and manage crypto assets. That doesn’t have to mean rolling back the ban on Bitcoin trading. In order to do this, we must build a legal definition that focuses on the distinct challenges cryptocurrency presents. This framework must provide for accountable and ethical stewardship over seized assets, including safeguarding the process from corruption, self-dealing and manipulation.

This echoes the situation with intellectual property rights. China, for a long time an accused hot-spot of lax enforcement, got the opposite message. In short, a clear and consistent approach to crypto regulation would send a powerful signal. That would go a long way toward demonstrating that China is committed to property rights, both real and cyber.

The path forward isn't easy. China faces a complex set of challenges. The inevitability of regulation stems from these three core issues: the risk of corruption, the potential for market instability, and the damage to China's international reputation.

What that regulation will eventually look like is still a mystery. Will China continue in the direction of a state-controlled, state-issued crypto economy? Will it intelligently liquidate its Bitcoin hoard over an extended period of time? Or would it require a bolder move, like burning the confiscated coins, thus permanently removing them from circulation?

Whatever China decides, one thing is clear: The current state of affairs is unsustainable. Regulation isn’t just an option, it’s the only solution. And the world will be watching intently to see how China steers through these challenging and potentially decisive waters.

Don’t even get me started on ICOs like BTBULL, SUBBD and BEST Wallet Token. Keep an eye on them. The shifting regulatory scene in China has the potential to present opportunity and risk alike to these burgeoning ventures. As always, don’t forget to do your own research and invest prudently. It can be difficult to keep up in the fast-changing world of crypto, where the only constant is change itself.

And as for those ICOs like BTBULL, SUBBD, and BEST Wallet Token? Keep an eye on them. The changing regulatory landscape in China could create both opportunities and risks for these emerging projects. But remember, always do your own research and invest wisely. The crypto world is full of surprises, and the only constant is change.