China debates how to handle criminal crypto cache

China’s growing pile of cryptocurrencies seized from illegal transactions is prompting local governments to find ways to dispose of the hoard and spurring calls from courts and the financial industry for better regulation.

Lawyers said the lack of rules around how authorities should handle seized bitcoin and other tokens, whose trading is banned on the mainland, has spawned inconsistent and opaque approaches that some fear could embolden lawbreakers and foster corruption.

Together with senior judges and police, attorneys are debating changes to…