China's Ministry of State Security (MSS) has stated that cryptocurrency anonymity is not genuine, despite being promoted by criminals as a way to escape government oversight. The agency emphasized that all blockchain transactions leave permanent digital records that can potentially be traced to users' identities.
In a statement issued Monday, the MSS addressed how cryptocurrencies facilitate illegal activities and the government's ability to identify those using them for illicit purposes. The agency noted that digital assets are frequently used to launder money from telecom fraud, online gambling, and cross-border smuggling, as well as to make ransomware payments and settle payments between foreign intelligence agencies and overseas agents.
While the MSS acknowledged that decentralized technology makes tracking more difficult, it stressed that true anonymity is impossible. The agency explained that blockchain technology guarantees a permanent record of all transactions, and that any transaction can be traced to its origin address. When users move funds through fiat-to-crypto bridges or centralized exchange platforms, professional organizations can use this data to identify them.
According to the MSS, cryptocurrency addresses—alphanumeric character strings—only temporarily obscure the link between a user and their identity rather than providing genuine concealment. The statement did not address privacy-focused cryptocurrencies such as Monero and Zcash, which have seen rising adoption.
