China security agency warns of cryptocurrency anonymity risks

China’s Ministry of State Security has issued a warning regarding the perceived anonymity of cryptocurrency, labeling the belief that crypto is untraceable a ‘dangerous misconception’. The ministry stated that while users may believe using crypto instead of traditional bank accounts hides their identity, transactions are actually recorded permanently on public blockchains.

The security agency linked cryptocurrency to various illicit activities, including money laundering, ransomware, cyberattacks, and espionage. It specifically warned that foreign intelligence agencies may exploit the myth of anonymity to send funds to recruits for spying operations. The ministry also noted that proceeds from telecom fraud, online gambling, and smuggling are often moved through crypto to evade financial regulators.

Although privacy-focused coins and mixing services can complicate investigations, authorities noted that wallet addresses can eventually be linked to real identities through trading platforms, IP addresses, and other external data. This warning follows previous measures from the People’s Bank of China and other agencies to reaffirm the country's ban on cryptocurrency.