Chinese Security Services Identify Cryptocurrencies as Tools for Espionage

The Ministry of State Security of China has warned citizens that cryptocurrencies can be used for money laundering, cyberattacks, and financing espionage activities. The agency noted that the notion of complete anonymity in crypto transactions is an illusion. According to the Ministry, foreign intelligence agencies may use cryptocurrencies to pay for espionage operations and convince potential agents of the impossibility of tracking such payments. The agency pointed out that blockchain stores the history of transactions, and when exchanging digital assets for fiat money or using payment services, crypto addresses can be linked to real individuals. Therefore, one cannot rely on absolute confidentiality of such transactions. The publication also emphasizes that the activities of cryptocurrency companies on Chinese territory are illegal. This statement continues Beijing's tough stance on regulating the sector. In February, the People's Bank of China and other government authorities confirmed existing restrictions for the cryptocurrency industry. China banned ICOs and closed cryptocurrency exchanges in 2017, and in 2021, authorities prohibited mining and declared businesses related to cryptocurrencies illegal. In Hong Kong, authorities have allowed the formation of a regulated market for digital assets. In July, the Supreme People's Procuratorate of China issued recommendations for combating money laundering using cryptocurrencies.

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