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They tried to do something similar with illegal torrents. 3 strikes and out.

I don't know a single place where this is actually enforced.

They push it on internet providers. I got email from provider listing specific torrents that they logged and that if there's another case found, my internet will stop. This is long time ago though and obviously you can just use VPN.

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Could they not still recognize the data packets from bitcoin even if you’re using a vpn?

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They could do statistical and timing analysis and guess that the data is bitcoin transactions. So government level attack is still possible and it's good to have redundancy here...

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They used to try to at least scare you but nowadays I torrent movies regularly without a VPN and nothing ever happens.

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Yeah, indeed. VPN

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