China Flags Iris-Scanning Crypto Projects as National Security Risk

China’s Ministry of State Security has issued a formal warning that foreign cryptocurrency projects using iris-scanning technology—similar to the model pioneered by Worldcoin—pose national security risks due to the potential misuse of biometric data [1]. The MSS emphasized that such practices, which offer cryptocurrency tokens in exchange for users’ iris scans, can lead to large-scale data collection that threatens both individual privacy and broader security interests [1].

The warning, published on the ministry’s official WeChat account, highlights documented cases in which a foreign entity allegedly used crypto incentives to systematically gather biometric data globally [1]. While the MSS did not directly name the project, the description closely aligns with Worldcoin, a cryptocurrency initiative developed by Tools for Humanity, which has previously drawn regulatory scrutiny in several countries. Earlier this year, Indonesia suspended Worldcoin’s operating permit after reports of suspicious activity emerged [1].

Worldcoin has defended its data collection as voluntary and anonymized, but critics and privacy advocates have raised concerns about the potential for exploitation or unauthorized access to sensitive biometric information [1]. The company has voluntarily paused its proof-of-human verification services in Indonesia and is working to clarify regulatory requirements [1].

China’s latest statement reflects an ongoing effort to strengthen control over data security, particularly when it involves foreign actors. The government has long been vocal about the risks associated with cryptocurrency, and this warning adds biometric data collection to its list of concerns [2]. The MSS noted that the collection and storage of such data could be leveraged for surveillance or other harmful activities, further justifying its stance against unregulated practices [2].

The focus on iris scanning underscores a growing global awareness of the sensitivity and permanence of biometric identifiers, which are increasingly used in digital identity verification and financial services. While no new regulatory measures have been announced, the MSS’s statements signal a firm policy stance against activities that could lead to foreign exploitation of domestic data [2].

Industry observers have noted that China’s concerns are not isolated, with multiple reports highlighting instances where biometric data was misused or sold for unintended purposes. The debate over the ethical and legal boundaries of data collection in the digital economy continues to gain momentum, especially as governments around the world refine their regulatory approaches.

China’s position aligns with a broader international trend of heightened scrutiny over the use of biometric data in cryptocurrency and FinTech applications. As digital identity verification becomes more central to financial transactions, the security of the data used in these systems is under increased regulatory and public attention. China’s warnings serve as a reminder to both regulators and companies of the potential risks involved in integrating sensitive biometric information into high-stakes technological ecosystems.

Source:

[1] title: China Warns Worldcoin-Style Iris Scanning a National Security Threat

url: https://www.coindesk.com/policy/2025/08/06/china-warns-worldcoin-style-iris-scanning-a-national-security-threat

[2] title: China Accuses Foreign Entity of Misusing Crypto for Surveillance

url: https://cryptorank.io/news/feed/86282-china-accuses-foreign-firm-misusing-crypto-surveillance-iris-scanning