China Ministry of State Security warns cryptocurrency anonymity is an illusion

China’s Ministry of State Security (MSS) has issued a warning stating that the perceived anonymity of cryptocurrencies is an “illusion.” The agency argued that blockchain technology maintains permanent, public transaction histories that can be analyzed to identify users.

The MSS noted that investigators can link blockchain data with information from exchanges, payment services, and digital footprints—such as IP addresses and device data—to trace identities. The ministry highlighted several security risks, including money laundering, cyberattacks, and cross-border criminal activities like smuggling and fraud.

Furthermore, the warning alleged that foreign intelligence agencies exploit the perceived untraceability of crypto payments to recruit individuals for espionage. This statement comes amid China’s ongoing restrictive policies regarding digital assets, which include bans on cryptocurrency mining and initial coin offerings.