If Chinese government pays attention to bitcoin, it would act the same way they do towards shadow banking: fine those involved in bitcoin yet backed by government, and prosecute the entities without gvernment backing (even execute a few, like the unlucky millionaire Wu Ying last year and Zeng Chengjie this year). The charge will be as usual: illegal fund-raising.

Right now there are two points that needs to be considered on understaind Chinese behaviour:

1. Chinese traders speculate. Few believed in a non-governmental currency taking root, as few believed anything significant yet non-governmental can take root. This translate to a huge bear market when Chinese government acts.

2. The atomsphere in China is like the roaring twenties which I read from books. Everyone feels like they are ready to make a big fortune. This can translates to potential huge bulls.

My two cents.

I feel it is still years away until Chinese government taking action on bitcoin. A centralized power does only a handful of things at a time, and their hands are full in Xi's first 2 year's reign. (Xi is a surname, not roman number 11)