China’s Crypto Liquidation Plan: How Hong Kong Gains Global Edge

- China’s crypto strategy injects liquidity to reshape global markets. - Hong Kong leverages LEAP 2.0 to challenge U.S. dominance. China announced it will liquidate its confiscated cryptocurrency holdings through Hong Kong's licensed virtual asset trading platforms. This bold move aligns with Hong Kong’s LEAP Digital Assets Policy 2.0, a framework designed to foster widespread adoption of digital assets and position the region as a global cryptocurrency hub. By channeling liquidity into the market, China aims to assert greater control over global crypto pricing dynamics and further its geopolitical agenda in digital finance. On August 2, 2025, Cointelegraph reported that China’s liquidation plan is part of a larger strategy to reshape the global digital asset landscape. This plan directly counters the dominance the United States established with its passive approach to crypto reserves. In addition, Hong Kong amplifies this initiative with a robust regulatory framework that unifies licensing protocols, legal compliance standards, and expanded tokenized financial products. The LEAP Digital Assets Policy 2.0 focuses on four key pillars: streamlining regulations, fostering innovation, cultivating cross-sector collaborations, and advancing regional talent development. Enhanced regulatory measures also supplement this framework, including the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and the new Stablecoin Ordinance, which both took effect on August 1, 2025. These measures ensure transparency and build confidence among institutional investors, thereby reinforcing Hong Kong's position as a prominent global hub for cryptocurrency activity. China’s direct engagement in liquidity management through Hong Kong could amplify the city’s influence on global cryptocurrency prices. This strategy contrasts sharply with the United States’ passive “hold-only” stance on its crypto reserves, offering a dynamic model for market stabilization and investor confidence. Additionally, these tactical moves align with Hong Kong’s ambition to secure a leadership role in international digital finance and reshape the sector's traditional power dynamics. According to CoinMarketCap, Bitcoin (BTC) was trading at $112,754.12 as of 16:15 UTC on August 2. This price reflects a 2.47% decrease in its 24-hour trading volume.