German Court Rules Crypto Theft Not Criminal Offense, Spur Urgent Legal Reforms

A German court has ruled that cryptocurrency theft cannot be prosecuted under current criminal law, citing the intangible nature of digital assets and the decentralized structure of blockchain technology. The decision, issued on July 29, 2025, highlights a critical legal gap in Germany’s ability to address crypto-related crimes and is expected to accelerate legislative reforms. The Braunschweig Higher Regional Court interpreted Section 242 of the German Criminal Code, which defines theft as the unauthorized taking of “movable property,” and concluded that cryptocurrencies, lacking physical form, fall outside this definition. The court further dismissed charges of computer fraud and data falsification, emphasizing that blockchain transactions involve authorized network operators and cannot be classified as unauthorized data manipulation [1].

The ruling underscores the challenges of applying traditional legal frameworks to decentralized digital systems. Judges noted that the blockchain’s decentralized architecture complicates the identification of unauthorized actors, as transactions are validated by multiple network participants rather than centralized entities. This interpretation effectively absolves individuals from criminal liability for crypto theft, even when private keys or wallets are compromised. A legal expert from WINHELLER, a law firm specializing in crypto regulation, warned that the decision creates a “protection gap” where millions in digital assets could be stolen without legal repercussions. The firm anticipates imminent legislative action to explicitly criminalize cryptocurrency theft and establish tailored protections for digital assets [1].

Civil litigation remains a potential recourse for victims, as courts can address property claims and restitution under civil law. While criminal prosecution is barred, victims may pursue compensation through civil suits, a distinction that highlights the need for clearer legal frameworks. However, this option places the onus on victims to navigate complex legal procedures, which may not fully restore their losses. The ruling has also raised concerns among cryptocurrency users, who now face heightened risks due to the absence of criminal penalties for theft. Experts stress the importance of proactive measures, such as securing private keys, to mitigate vulnerabilities [1].

The decision is likely to spur urgent reforms in Germany’s regulatory landscape. Analysts predict that lawmakers will expand definitions of movable property to include cryptocurrencies and introduce specific criminal provisions for digital asset crimes. Such changes would align with global efforts to adapt legal systems to the rise of decentralized finance. The court’s emphasis on the unique characteristics of blockchain technology has already influenced discussions around the broader implications of decentralized systems for traditional legal concepts. This case marks a turning point in the evolution of crypto regulation, forcing policymakers to confront the limitations of existing laws [1].

The outcome also raises questions about the enforceability of property rights in the digital age. By rejecting the applicability of theft laws to cryptocurrencies, the court has exposed a fundamental tension between technological innovation and legal traditions. While civil remedies offer partial solutions, the absence of criminal accountability underscores the need for comprehensive reforms. As the crypto market continues to grow, this ruling serves as a catalyst for rethinking legal protections in a decentralized economy [1].

Sources:

[1] German Court Rules Bitcoin Theft May Not Constitute Criminal Offense, Prompting Possible Legal Reforms (https://en.coinotag.com/german-court-rules-bitcoin-theft-may-not-constitute-criminal-offense-prompting-possible-legal-reforms/)