Key Highlights
- China’s MSS warned that cryptocurrencies can be used for money laundering, cyberattacks and espionage.
- The agency said crypto transactions are not completely anonymous because blockchain records and crypto-to-fiat exchanges can help link transactions to real identities.
- The warning adds national security concerns to China’s long-running crackdown on crypto, while Hong Kong continues to develop a regulated digital-asset market.
China’s top intelligence agency has warned that cryptocurrencies can be used for more than just moving money.
The Ministry of State Security (MSS) in a report on Monday, September 28, said that virtual currencies can help with money laundering, cyberattacks and foreign espionage. The agency also said the belief that crypto transactions are completely anonymous is an “illusion.”
The agency said overseas intelligence services could use cryptocurrencies when trying to recruit people for spying. According to the ministry, these agencies may tell potential recruits that crypto payments are difficult to trace, making them feel safer about receiving money for their activities.
But the MSS said that confidence would be misplaced.
The agency argued that crypto transactions leave records on blockchains. While a wallet address may not immediately show the name of the person behind it, the transaction history remains on the network.
Crypto transactions can still be linked to real identities
The MSS added that when people move crypto through exchanges, convert it into traditional money or use payment services, those steps can make it easier to connect transactions to real identities.
The ministry described crypto anonymity as a “false proposition” and an “illusion.” It also warned that the risks linked to virtual currencies should not be underestimated.
The warning was not limited to espionage. The MSS said cryptocurrencies have also been used in money laundering and cyberattacks. It further accused what it called “overseas anti-China hostile forces” of using crypto in activities that could disrupt China’s financial system and harm national security.
China maintains its long-running crypto restrictions
The agency also repeated Beijing’s position that cryptocurrency businesses are illegal in mainland China.
China has held this position for years. In 2017, authorities banned initial coin offerings and moved to shut down cryptocurrency exchanges.
Four years later, China banned Bitcoin mining and declared cryptocurrency-related business activities illegal.
The country has continued to tighten its rules since then. In February 2026, the People’s Bank of China and seven other government agencies issued a joint notice reaffirming restrictions on virtual currencies. The new rules also covered real-world asset tokenisation, an area where traditional assets are represented through digital tokens.
Beijing says crypto speculation creates financial risks
Chinese authorities said at the time that speculation involving virtual currencies could disrupt economic and financial order and put people’s property at risk.
China has also raised concerns about stablecoins. Authorities have said virtual currencies are not official money and cannot be used like normal currency. They have warned that stablecoins could create risks involving fraud, money laundering and illegal transfers across borders.
In short, the new MSS warning adds another concern to that long-running crackdown: national security.
Andrew Fei, a partner at Hong Kong law firm King & Wood, said the warning was a reminder that virtual currency trading remains banned in mainland China. He said the message was clear that cryptocurrencies should not be treated as an anonymous or untraceable safe place for illegal activities.
“The message being sent is clear: virtual currencies should not be mistaken for some kind of anonymous or untraceable safe haven for nefarious actors,” Fei said.”
China’s approach is different from Hong Kong’s. While mainland authorities continue to restrict crypto activity, Hong Kong, meanwhile, continues to develop a regulated digital-asset market.
This warning therefore puts crypto in a wider spotlight in China. For the MSS, the concern is no longer only about financial losses or illegal trading. The agency is also warning that digital currencies can be used to support foreign intelligence activities, while their blockchain records may leave a trail behind.
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