China's top prosecutors promoted a Bitcoin (BTC, the largest cryptocurrency by market capitalization) theft conviction as a model case for handling crypto-related crime. The conviction dates from 2025; the 7 Jun elevation is new. The move caps a six-month judicial sequence that formalizes crypto's status as property under criminal law while keeping its trading illegal.
China Treats Bitcoin as Property in Theft Case Despite Trading Ban
9 June 2026 - 10:42 CEST
By Oihyun Kim
The Supreme People's Procuratorate (SPP, China's highest prosecutorial authority) published the Qingdao case on its official channels as part of a series implementing Xi Jinping Thought on the Rule of Law, the party doctrine guiding China's legal system.
A Licang District People's Court convicted a defendant surnamed Zhang on 28 Apr 2025, and the Qingdao Intermediate People's Court rejected his appeal on 10 Nov 2025. Zhang memorized 11 of the victim's 12 recovery words plus the first letter of the 12th, then brute-forced the rest. He transferred 107 bitcoins, which were later cashed out for approximately 660,000 yuan. The Licang court sentenced him to 10 years and nine months in prison and fined him 100,000 yuan.
Zhang claimed in his defense that the transfer constituted a "protective takeover" to safeguard the victim's assets, but the court rejected this argument after prosecutors traced the funds through electronic evidence showing the bitcoins were cashed out.
Crypto trading ban extended
Chinese authorities have been building towards this position since late 2025. In December 2025, the Procuratorial Daily, the SPP's official newspaper, ran a commentary conceding that the legal basis for disposing of seized crypto remained ambiguous and proposing a tiered model of sale, destruction or return.
In February 2026, the People's Bank of China and seven other agencies issued the 2026 Circular on Virtual Currency Risks, restating the ban on crypto-related business activities, extending it to stablecoins, and bringing tokenized assets under regulatory oversight. In May, the Supreme People's Court said it would study adjudication standards for virtual-currency cases as part of an effort to harmonize rulings nationally.
From ambiguity to template
The Qingdao prosecutor said current policies deny crypto legal-tender status but do not deny its property attributes. The case provides a template, the procuratorate said, for unifying evidence and prosecution standards across local jurisdictions where rulings have diverged for years.
The framework does not legitimize crypto trading. But criminal-law protection for holders is now explicit, and the Qingdao template gives local procuratorates and courts a reference where rulings had previously diverged.
For self-custody users on the mainland, where holdings persist despite the trading ban, a recovery-phrase compromise now sits clearly inside criminal law rather than in a grey zone. Combined with the Supreme People's Court's May commitment to harmonize adjudication standards, the move points to a more predictable enforcement track for crypto theft, fraud and asset recovery, though one in which trading itself remains outside the law.
Potential downsides include continued uncertainty for users regarding how seized assets will be handled in practice, as well as regulatory challenges stemming from the ongoing trading ban that may complicate recovery efforts or create inconsistencies across jurisdictions. The case also highlights competitive limitations for China's crypto ecosystem, as the strict trading prohibition persists even as property status gains clearer criminal-law recognition.
