China Says Bitcoin Is Banned, Yet Courts Still Call It Protected Property

China Banned Bitcoin, But Prosecutors Still Say It Can Be Protected Property

China keeps trying to shut Bitcoin out of its financial system, but its courts are still being forced to admit the obvious: if something has value and can be stolen, the law has to deal with it.

• China’s Supreme People’s Procuratorate published a Qingdao case on June 7
• The case, titled “107 Bitcoins Disappeared”, ended with a 10 years and 9 months prison sentence
• Prosecutors said Bitcoin has economic value and can be exclusively controlled by its owner
• China bans crypto trading and mining, yet Bitcoin still appears to count as protected property under criminal law

The case centers on a man identified as Zhang, who stole 107 BTC using the victim’s wallet recovery phrase. For those new to crypto, a recovery phrase is basically the master backup key to a wallet. If someone gets it, they can usually move the funds without needing your permission. It is the digital equivalent of handing a thief the keys to your house, your car, and the deed to the garage for good measure.

Zhang later liquidated the coins. Based on those liquidation proceeds, the stolen Bitcoin was valued at 660,000 yuan, or about $91,000. For that theft, he received 10 years and 9 months in prison and a 100,000 yuan fine, roughly $13,800.

The legal significance goes far beyond a simple theft case. China’s highest prosecutorial authority, the Supreme People’s Procuratorate (SPP), published the Qingdao decision as guidance for lower prosecutors and courts. That matters because the SPP is not just some random office filing paperwork. It is China’s top prosecutorial agency, helping shape how criminal law is applied across the country.

Prosecutors argued that Bitcoin qualifies as property because it has “demonstrable economic value” and can be “exclusively controlled by its owner.” In plain English: the state may not like Bitcoin’s use, but it recognizes that it is something people can own, lose, steal, and fight over in court.

“107 Bitcoins Disappeared”

Bitcoin qualifies as legally protected property under China’s criminal law.

Bitcoin has “demonstrable economic value” and can be “exclusively controlled by its owner.”

That creates a bizarre but very real contradiction. Beijing tells citizens they cannot freely trade Bitcoin, mine it, or run exchanges, but when someone steals it, prosecutors still want the courts to treat it like property. So Bitcoin is forbidden for normal use, but protected when a criminal snatches it. That’s not elegant legal philosophy. That’s reality bullying the rulebook.

China’s Crypto Ban Still Isn’t the Whole Story

China’s blanket crypto ban, rolled out in September 2021, prohibited trading, exchanges, and mining. The crackdown was sold as a way to protect financial stability, curb speculation, and reduce risks tied to capital flight. In practice, it also showed Beijing’s usual instinct: if something threatens state control over money, crush it first and ask questions later.

That hostility has only widened. In 2026, Chinese authorities expanded restrictions to include stablecoins, RWA tokenization, and offshore yuan-pegged digital currencies. Stablecoins are crypto assets designed to track something like the U.S. dollar, while RWA tokenization refers to putting claims on real-world assets, such as bonds or property, onto blockchain rails. China’s message is clear: anything that looks like a rival financial layer, especially one outside state control, gets the boot.

But Bitcoin is awkward for that strategy. It is not a company, not an exchange, and not a domestic payment app that can be neatly regulated into submission. It is a neutral, decentralized network with enough economic weight that even hostile governments run into practical limits when trying to pretend it does not exist.

Chinese courts have already hinted at this before. A Shanghai court in 2024 described Bitcoin as a “unique and non-replicable” asset with clear financial attributes. That language is important. It shows that courts are not treating Bitcoin like some meaningless internet token or digital confetti. They are recognizing scarcity, ownership, and economic value — the core traits that make property law function at all.

The South China Morning Post previously reported on that Shanghai ruling, and it fits neatly with the Qingdao case. Taken together, these decisions suggest that Chinese legal authorities are drawing a line between use and ownership. You may not be allowed to openly participate in the Bitcoin economy, but if someone steals your BTC, the law still appears prepared to treat it as something worth protecting.

What the Qingdao Case Means for Bitcoin Legal Status in China

This is where the whole thing gets genuinely interesting. The Supreme People’s Procuratorate’s publication of the case is not just a one-off courtroom oddity. It signals a broader legal posture. Lower-level prosecutors and judges are being told, in effect, that Bitcoin theft is not a joke and not some invisible crime involving fake money. It is property crime.

That has a few major implications:

• Bitcoin can be recognized as property even in a hostile jurisdiction
• Crypto theft can still be prosecuted under criminal law
• Ownership and use are being treated as separate legal questions
• China’s anti-crypto stance is still full of contradictions

In a sense, this is the unavoidable result of Bitcoin’s design. If an asset can be owned, transferred, and stolen, courts eventually have to decide whether they are going to ignore it entirely or classify it within existing legal frameworks. China has chosen the second option, even while continuing to ban the first.

That does not make Beijing a Bitcoin ally. Far from it. The state still wants tight control over money flows, capital movement, and financial infrastructure. But the legal system is doing what legal systems do when reality shows up with receipts: adapting just enough to avoid becoming absurd.

For Bitcoin holders, this is a useful reminder that legal recognition can take strange forms. A government does not need to approve of Bitcoin’s use to admit that it has value. And once a court says an asset is real property, it becomes harder to dismiss it as vaporware for nerds and speculators. That ship has long since sailed.

Why This Matters Beyond China

The bigger lesson is not just about China. It is about how governments everywhere respond to decentralized assets. Bans often sound decisive on paper, but they rarely erase economic reality. They just push activity underground, where criminals, scam artists, and black-market operators do their best work.

Meanwhile, courts and prosecutors still have to deal with theft, fraud, and ownership disputes. If an asset has value, the legal system eventually gets dragged into the mud whether it likes it or not. Bitcoin keeps forcing that conversation because it is scarce, portable, and impossible to fully censor at the network level.

That is also why this kind of ruling matters for Bitcoin’s broader legitimacy. It reinforces the idea that BTC is not merely a speculative ticker on a trading app. It is property. It can be stolen. It can be owned. It has market value. And even governments that hate it tend to find out, sooner or later, that pretending otherwise is a losing game.

There is also a victim-protection angle here that should not be ignored. If courts recognize Bitcoin as property, then victims of theft have a stronger legal basis for restitution and prosecution. Recovery is still hard — blockchain does not magically undo bad opsec — but legal recognition matters. It gives victims a path, however imperfect, to pursue justice instead of being told their loss was just a paperwork problem with extra steps.

For all the state hostility, Bitcoin keeps doing what Bitcoin does: forcing institutions to face reality instead of their preferred narrative. China can ban the rails around it. It can harass miners, shut down exchanges, and clamp down on stablecoins and tokenization schemes. But it cannot fully wish away the fact that Bitcoin has value, scarcity, and ownership characteristics that courts eventually have to recognize.

That is the uncomfortable truth Beijing keeps running into. You can ban Bitcoin’s use, but if someone steals it, the law still has to decide whether a crime happened. And once the answer is yes, the fiction starts to fall apart.

Key questions and takeaways

What did China’s top prosecutors say about Bitcoin?
They published a case treating Bitcoin as legally protected property under criminal law.

Does China still ban crypto?
Yes. China still bans crypto trading, exchanges, mining, and has broadened restrictions to other digital asset categories.

How can Bitcoin be banned and protected at the same time?
China can prohibit its use in commerce while still recognizing it as property when it is stolen.

What happened to the thief in the Qingdao case?
He was sentenced to 10 years and 9 months in prison and fined 100,000 yuan.

Why does this matter for Bitcoin’s legal status?
It shows that even hostile jurisdictions may be forced to recognize Bitcoin as real property with economic value.

Is this a pro-Bitcoin ruling?
Not really. It is more a grudging acknowledgment that Bitcoin exists and can be stolen than an endorsement of crypto freedom.

What does this reveal about China’s crypto policy?
It is internally inconsistent: punish the use, but protect the asset when theft happens. That is policy with a split personality.