China's State Security Ministry Warns of Crypto's Role in Espionage

China's Ministry of State Security has issued a warning about the potential use of virtual currencies in espionage. The ministry stated that foreign intelligence agencies may promote crypto transfers as hidden and difficult to verify, which could be used to recruit people and move espionage funds.

The warning also challenged the idea that crypto transactions are permanently anonymous, citing public blockchains that preserve transaction records and specialist analysis that can trace wallet activity and reconstruct the movement of funds.

The ministry described crypto's supposed anonymity as 'an illusion', noting that device information and internet-protocol address records may help connect wallet activity with real identities.

This warning follows China's February 6 policy notice classifying virtual-currency-related business activities in the country as illegal financial activities.