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Anonymity is an illusion: China labels cryptocurrencies "accomplices" in espionage.
Сryptocurrency
China’s Ministry of State Security (MSS) has issued a stern new warning regarding the risks associated with cryptocurrencies.
The agency highlighted their role in criminal activity and emphasized that transactions are not anonymous, the *South China Morning Post* reports.
A post on the MSS’s social media channels states that virtual currencies facilitate money laundering and cyberattacks, and act as "accomplices" in espionage. According to the agency, foreign intelligence services attempt to allay the fears of potential recruits by assuring them that cryptocurrency movements are difficult to trace.
The MSS dismissed the notion of crypto-transaction anonymity as a "false claim" and an "illusion." Transaction histories are permanently recorded on the blockchain, and it is difficult to conceal one's true identity when exchanging cryptocurrency for fiat currency or using other payment interfaces. The agency added that "foreign hostile anti-China forces" frequently use cryptocurrencies to undermine financial stability and threaten national security. Cryptocurrency-related business is banned in China.
While the MSS has focused on national security threats, the country's financial regulators are waging a broader campaign against the industry. In February, the People's Bank of China—along with seven other agencies, including the Securities Regulatory Commission, the National Development and Reform Commission, and the Ministry of Public Security—issued a joint notice. The notice reaffirmed strict controls on crypto-related activity and extended restrictions to the tokenization of real-world assets. The agencies stated that speculation in virtual currencies undermines the "economic and financial order" and threatens the safety of citizens' assets. In 2017, Beijing banned initial coin offerings (ICOs) and shut down cryptocurrency exchanges; in 2021, it banned Bitcoin mining and outlawed all cryptocurrency-related activities. Some economists question the strictness of the ban in light of Donald Trump’s pledge to make America the "crypto capital of the world." However, Beijing has not relaxed domestic controls, even though it allowed Hong Kong to attract crypto businesses in 2022.
According to Andrew Fei, a partner at the law firm King & Wood in Hong Kong, the Ministry of State Security’s warning serves as a "timely reminder" that trading in virtual currencies remains prohibited in mainland China and is viewed by governments worldwide as entailing significant risks.