# China’s State Security Ministry Says Crypto Can Aid Espionage

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/26079
Published: 2026-10-01T06:06:36.000Z
Updated: 2026-10-01T06:06:36.000Z
Section: Regulation

> The ministry said blockchain, device and internet-protocol records can help identify users and trace fund flows.

China’s Ministry of State Security warned Sept. 28 that virtual currencies can help finance espionage, while blockchain and payment records may enable authorities to identify users despite crypto’s supposed anonymity.

The ministry described virtual currencies as a potential “accomplice to espionage” and said foreign intelligence agencies may promote crypto transfers as hidden and difficult to verify. Such transfers could be used to recruit people and move espionage funds, it said.

The warning urged people to report suspected recruitment involving crypto payments, sensitive information or suspicious transfers through China’s 12339 national-security reporting channels.

The ministry also challenged the idea that crypto transactions are permanently anonymous. Public blockchains preserve transaction records, while specialist analysis can trace wallet activity and reconstruct the movement of funds, it said.

Fiat-to-crypto conversions and payment interfaces can leave device information and internet-protocol address records. Those records may help connect wallet activity with real identities. The ministry described crypto’s supposed anonymity as “an illusion.”

The statement did not identify a specific blockchain, token, transaction, espionage case or seizure. It presented virtual currencies as a payment and transfer channel that intelligence services could use, rather than identifying Bitcoin (BTC), Ether (ETH) or another asset as an espionage technology.

The warning follows China’s Feb. 6 policy notice classifying virtual-currency-related business activities in the country as illegal financial activities. The notice, issued by eight government departments, reaffirmed that virtual currencies do not have the legal status of fiat currency and expanded restrictions to certain offshore issuance and real-world-asset tokenization activities.

The warning linked virtual-currency activity to national-security risks. It did not announce a new law, investigation, asset seizure or market action.