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As others have explained, this behavior is extremely common in dementia, including specifically the delusion of being stolen from. The dementia will progress and this behavior may fade away. My husband's paranoia lasted a few months, and that was the hardest few months of the journey for me!
What kind of plates went missing? Dishes? Car license plate? Dentures? I suggest you (your husband, I guess) wait a bit and then say something like this: "I feel so bad that your plates are missing. That must really bother you. Will you let me help replace them?" (Don't admit taking them but don't get into an argument over that. Just be sympathetic and offer help.) You might also try something like, "It is OK for you to keep all your house keys to yourself. But I'd still like to stop by to visit a bit every day. May I just knock on your door?"
What kinds of things did your husband do when he visited? Is granddad at any risk if nobody attends to these things? If so, and this doesn't blow over soon, I think I would notify Adult Protection Services of the situation. Obviously granddad is not being abused or neglected, but he is a vulnerable adult with potentially self-harmful behaviors. They would at least investigate.
Dementia is a devastating disease not only for the person who has it but also for their loved ones. People with dementia are not safe living alone beyond the earliest stage. Having his grandson check on him daily can help extend this "safe" period for granddad, but keep in mind that as the dementia progresses that will not be enough, even if he gives your husband the key again.
There is not really much you can do about it but hope the false memory fades away. I know it is upsetting and your husband probably feels like his character has been attacked. I'm sorry. It is just the way of dementia very often.
When my mother has said things that cast shadows on my character, I just say, "I would never do that" and leave it. It might not clear my role as villain with her, but it makes me feel better that I took up for my own character. Sorry you guys are going through this and I hope it changes.
Does your husband have poa for health and finances?