China says cryptocurrency anonymity is an illusion

The words fly away, the writings remain. A warning signed by the Ministry of State Security, this Monday, September 28. China's main intelligence and counter-espionage service says the anonymity of cryptocurrencies is an illusion. According to him, every transaction sooner or later ends up leading to a name.

Did you think that a nameless wallet was enough to disappear? Beijing, however, reminds us that the register forgets nothing. However, in this country, holding Bitcoin remains tolerated but using it is prohibited. And the target goes well beyond small-time crooks.

Crypto anonymity: the public register that forgets nothing

The reasoning is in a few lines. According to the ministry's text taken up by the state portal Guangming, a blockchain functions like a public ledger. In fact, each transaction is recorded there forever, without the possibility of erasing or modifying it. Of course, the address of a wallet does not have a name.

But she wears a mask. Investigators therefore work their way up the chain by cross-referencing wallet addresses with device identifiers and IP addresses. These numbers indicate your connection to the network. However, according to Beijing, the real Achilles heel lies elsewhere. Switches between fiat and crypto necessarily leave a trace with exchange platforms and payment providers. However, these actors know the identity of their customers.

The ministry also invites the population to report any suspicious activity to 12339. This is its reporting line dedicated to national security.

Traceability of cryptos: the Bitfinex affair proves Beijing right

On the merits, it is difficult to dispute the argument. In 2016, a hacker emptied the Bitfinex platform of nearly 120,000 BTC. Then, in February 2022, the US Department of Justice recovered approximately 94,000 of these bitcoins. The loot is then worth 3.6 billion dollars. The authorities also arrested a New York couple who had been trying to launder the loot for years.

Patience and spreadsheets. On-chain analysis companies like Chainalysis have built their entire economic model on this observation. Indeed, as soon as a single address is linked to a real identity, via an exchange or a merchant, the entire history becomes readable.

There remains the honest opposite. Privacy tools do exist, from the Monero protocol to transaction mixing services. However, their promoters are playing big. Thus, the founders of the Samourai Wallet received prison sentences in the United States at the end of 2025.

Spies, ransoms and money laundering: why Chinese intelligence is talking crypto

The ministry lists three threats. First, the winnings from telephone fraud and online gambling, laundered beyond the banking radar. Then, the ransoms demanded by the perpetrators of cyberattacks. Last but not least, the financing of spies. According to him, foreign services use cryptocurrencies to pay agents recruited in China. He also warns against paid crypto job offers that require access to sensitive information.

On the regulatory side, Beijing has already locked everything down. On February 6, 2026, eight Chinese authorities published a new notice which replaces the 2021 circular. Among them are the People's Bank of China and the Ministry of Public Security. The text maintains the ban on all crypto activity in the territory. It also prohibits stablecoins backed by the yuan without express authorization. In addition, it entrusts the tokenization of real assets (RWA) to the supervision of financial regulators.

The irony will not escape anyone. Because the country which denounces the false discretion of cryptos is simultaneously pushing its digital yuan. However, this central bank currency integrates the visibility of the State from its design.