Qingdao Prosecutors Rule Bitcoin Qualifies as Property Under Chinese Criminal Law in Landmark Theft Case

Prosecutors in Qingdao, China, have formally determined that Bitcoin qualifies as property under the country’s criminal law, marking a significant legal clarification in a case involving the theft of 107 Bitcoin. The ruling, reported by local Chinese media, sets a precedent for how digital assets may be treated in criminal proceedings within China’s strict regulatory environment.

Case Details and Sentencing

The defendant, identified by the surname Zhang, was sentenced to 10 years and nine months in prison and fined 100,000 yuan (approximately $13,800). According to court documents, Zhang obtained the victim’s cryptocurrency wallet recovery phrase and used it to transfer and sell the stolen Bitcoin. The prosecution successfully argued that Bitcoin meets the legal definition of property because it holds economic value and can be exclusively controlled by an owner.

The value of the theft was calculated based on the more than 660,000 yuan (over $91,000) that Zhang received from selling the stolen Bitcoin, rather than the market value at the time of the crime. This distinction is important for future cases, as it establishes a method for valuing stolen cryptocurrency in Chinese courts.

Legal Implications for Cryptocurrency in China

China has maintained a broad ban on cryptocurrency trading and mining since 2021, but this ruling clarifies that digital assets are not beyond the reach of criminal law. The Qingdao prosecutors’ decision aligns with earlier civil court rulings that recognized Bitcoin as property protected by law, even while the government restricts its use in financial markets.

Legal experts note that this distinction allows authorities to prosecute theft, fraud, and other crimes involving cryptocurrency without legitimizing it as a financial instrument. The ruling could encourage more victims of crypto-related crimes to report incidents to police, knowing that prosecutors have a framework to pursue charges.

Broader Context and Market Impact

This case arrives amid growing global debate over the legal classification of digital assets. While countries like the United States and Japan have established regulatory frameworks, China’s approach remains uniquely restrictive yet pragmatic. The Qingdao ruling suggests that Chinese authorities are developing nuanced legal tools to address cryptocurrency-related crime without altering the overall ban on trading.

For cryptocurrency holders in China, the ruling provides a measure of legal protection against theft, though it does not signal any relaxation of trading restrictions. The case also highlights the risks associated with storing recovery phrases insecurely, as a single compromised phrase can lead to total loss of funds.

Conclusion

The Qingdao prosecutors’ ruling that Bitcoin constitutes property under criminal law represents a practical evolution in China’s legal treatment of digital assets. While the government maintains its prohibition on cryptocurrency trading, this decision ensures that victims of theft have legal recourse and that criminals cannot exploit regulatory ambiguity to evade justice. The case serves as a reminder of the importance of secure storage practices and the growing intersection between traditional criminal law and emerging digital asset technologies.

FAQs

Q1: Does this ruling mean Bitcoin is legal in China?
No. China maintains a ban on cryptocurrency trading and mining. This ruling only recognizes Bitcoin as property for the purpose of criminal law, allowing prosecution of theft and fraud cases. It does not legalize trading or ownership for investment purposes.

Q2: How was the value of the stolen Bitcoin calculated?
The court used the actual amount the defendant received from selling the stolen Bitcoin — more than 660,000 yuan (about $91,000) — rather than the market price at the time of the theft. This approach provides a clear valuation method for future cases.

Q3: What is a recovery phrase and why is it important?
A recovery phrase, also known as a seed phrase, is a set of words that can restore access to a cryptocurrency wallet. Anyone who obtains this phrase can control the wallet and transfer its funds. Keeping it secure is critical to preventing theft.