China Warns Crypto Users Blockchain Transactions Leave Permanent Trails

China's Ministry of State Security (MSS) has issued a warning to crypto users, stating that blockchain transactions cannot be used to disconnect transactions from personal identities or evade the law.

The MSS says that blockchain records are permanent and transparent, allowing transactions to remain traceable on a public ledger. This means that even though wallet addresses may obscure the link between an address and a real identity, they can still be linked through device information, IP addresses, and digital traces left behind when interacting with traditional financial systems.

The ministry highlighted four specific criminal use cases that have exploited this misconception, including money laundering, ransomware demands, foreign intelligence agencies using crypto to fund espionage operations, and the loss of private blockchain keys without recovery mechanisms.