China’s Ministry of State Security Says Crypto Anonymity Is an Illusion
The MSS said blockchain records, wallet addresses, exchange interfaces and other digital data can help trace fund flows and identify users.
China’s Ministry of State Security (MSS) said Sept. 28 that cryptocurrency transactions are not permanently anonymous, warning that blockchain records and other digital data can help trace users.
The MSS said blockchain data is open and transparent, transaction records cannot be altered and the records support tracing the flow of funds. Wallet addresses may temporarily obscure the connection between an address and its user, but they do not provide permanent identity concealment.
Fiat-to-crypto and crypto-to-crypto conversions can also leave digital traces, including device information and network IP addresses. The MSS said professional organizations can combine on-chain analysis with big-data comparisons to identify users behind wallet addresses and reconstruct transaction paths.
The warning described virtual currencies as potential tools for money laundering, cyberattacks, espionage, financial-order disruption and threats to national security. It did not identify a specific blockchain, token, investigation or suspect.
The MSS post also said virtual currencies do not have the same legal status as fiat currency in China and that illegal virtual-currency financial activity is not protected by law.
The statement concerned cryptocurrency generally and did not establish that every wallet or transaction can be linked to a real-world identity. It described tracing through blockchain records, exchange or payment interfaces and other digital data.
The post did not announce a new law, regulatory change, investigation, asset seizure or market action. It also provided no transaction volumes, investigation totals or other numerical figures.
