China’s Security Ministry Warns Crypto Can Aid Espionage and Money Laundering

Beijing, China — September 28, 2026 — China’s Ministry of State Security warned that virtual currencies can be used in money laundering, cyberattacks and espionage, and said that crypto transactions are not truly anonymous.

What happened

In an article credited to the ministry’s official WeChat account, the ministry described virtual currency as a digital token that moves through online networks, often using blockchain technology. A blockchain is a shared digital record of transactions. The ministry said some people wrongly assume that using crypto instead of a bank account automatically removes the connection between a payment and the person who made it.

The warning focused on the security risks the ministry associates with that assumption. It said virtual currencies can help criminals split, transfer and conceal illegal funds. The examples listed in the article included proceeds from telecommunications fraud, online gambling and cross-border smuggling. According to the ministry, moving funds through crypto can make it harder for ordinary financial controls to identify the source and destination of the money.

The ministry also linked crypto to cybercrime. It said hackers and other attackers may use virtual currency when demanding ransom after ransomware attacks or network intrusions. In that situation, the digital payment is presented as a way for the attacker to receive money while attempting to conceal an identity.

A third part of the warning concerned espionage. The ministry alleged that overseas intelligence agencies promote the idea that crypto transfers are difficult to verify in order to reduce the concerns of people they are attempting to recruit as spies. It said virtual currency may then be used to send funds to those recruits. These are allegations made by the ministry and are presented here as such.

Three risks identified by the ministry

• Money laundering: The ministry said illegal proceeds can be divided and moved through crypto in an effort to avoid financial supervision and make the money appear legitimate.
• Cyberattacks: It said hackers may request crypto as ransom after ransomware or other network attacks because the payment can be sent online without a conventional bank transfer.
• Espionage: It alleged that overseas intelligence agencies may use crypto payments to help recruit sources and provide them with funds.

The ministry presented these risks as connected to the way virtual currencies circulate online and to the belief that wallet addresses cannot be linked to real people. It did not say that every crypto user is involved in crime. Instead, it urged readers to recognize how the technology could be used by people engaged in illegal activity.

Why the ministry says crypto is not anonymous

The article challenged the phrase “anonymous transaction.” The ministry said transactions are recorded on a blockchain, which it described as public, transparent and resistant to later alteration. That means a transaction can leave a permanent record even when the record initially shows only a wallet address rather than a person’s name.

Wallet addresses can look like strings of letters and numbers, so they may not immediately identify the individual controlling them. However, the ministry said additional information can appear when crypto is exchanged for government-issued currency or moved through trading platforms and payment interfaces. It specifically referred to traces such as device identifiers and internet protocol (IP) addresses.

This does not mean that every wallet can automatically be connected to a named individual. It means that transaction records can be combined with information from exchanges, payment services and digital devices, according to the ministry. The ministry therefore called the belief in completely untraceable crypto transactions a “false proposition” and an illusion.

Why it matters

The statement is a security warning and an explanation of the ministry’s position. It is not evidence that every crypto transaction is criminal or that every wallet user can be identified. The ministry’s statements about criminal and espionage use should therefore be read as attributed government allegations rather than as independently established facts about every transaction.

The warning is nevertheless significant because it brings cryptocurrency into the ministry’s public discussion of money laundering, cyberattacks and national-security threats. It also makes clear that the ministry wants people to reject the idea that crypto provides a guaranteed legal or financial safe haven.

The South China Morning Post independently reported the warning on September 28. It said the ministry linked virtual currencies to money laundering and cyberattacks, called them“accomplices” in espionage, and argued that blockchain records make transactions harder to hide than users may assume.

What happens next

The ministry’s article did not announce a new deadline, investigation or implementation schedule. Instead, it repeated its warning about the risks of virtual currencies and told readers to protect themselves from schemes that combine crypto payments with requests for sensitive information or suspicious transfers.

For suspected cases involving crypto as an inducement to provide confidential information or move questionable funds, the article listed China’s national security reporting hotline, 12339, and the online reporting platform at www.12339.gov.cn. It also referred readers to the Ministry of State Security’s official WeChat account or to local national-security authorities.