China Warns Crypto Projects Using Iris Scanning Over Data Security Risks

China has issued a formal warning against cryptocurrency projects that utilize iris-scanning technology, citing serious privacy and national security concerns. The Ministry of State Security (MSS) expressed alarm over the potential for sensitive biometric data—specifically iris scans—to be harvested and transmitted abroad in exchange for digital tokens [1]. These scans, being irreversible and deeply personal, pose a unique risk compared to traditional identifiers like passwords [2].

The warning does not name a specific company but appears to target initiatives that offer crypto rewards in exchange for biometric verification. One such project, Worldcoin, has emerged as a likely focus of the MSS concern. Co-founded by OpenAI’s Sam Altman, Worldcoin uses a device called the “Orb” to scan users’ irises and distribute tokens as part of a broader effort to create a decentralized digital identity network [3]. The project has already faced regulatory pushback in countries such as Germany, France, and Kenya over data privacy and consent issues [4].

China’s stance reflects a broader regulatory shift toward tightening control over the collection and use of biometric data. The MSS emphasized that the unauthorized transmission of such data could enable identity theft, surveillance, or even espionage, particularly if the data falls into the hands of foreign entities [5]. The warning aligns with the Chinese government’s broader anti-crypto policies, which have long restricted trading and issuance of digital assets within the country [6].

The statement also highlights growing global scrutiny of blockchain-based identity systems, particularly those that rely on sensitive biometric data. Regulators are increasingly aware of the potential for misuse in decentralized systems, where data can be distributed across borders with little oversight [7]. As a result, projects like Worldcoin may face rising compliance burdens and operational challenges in regions with strong data protection laws [8].

The MSS’s intervention signals a shift in regulatory priorities, emphasizing national data sovereignty and the need for stricter oversight in the crypto space. As governments worldwide reassess the balance between technological innovation and individual privacy, the future of biometric-driven crypto projects may depend on their ability to meet stringent regulatory expectations [9].

Source:

[1] Mitrade (https://www.mitrade.com/insights/news/live-news/article-3-1016641-20250806)

[2] AInvest (https://www.ainvest.com/news/china-warns-foreign-crypto-firm-iris-data-collection-security-concerns-2508/)

[3] FinanceFeeds (https://financefeeds.com/china-flags-eye-scanning-crypto-projects/)

[4] TheCryptobasic (https://thecryptobasic.com/2025/08/06/china-warns-of-security-risks-from-global-iris-scan-collection-linked-to-crypto-rewards/)

[5] CoinCentral (https://coincentral.com/chinese-ministry-flags-security-threat-from-iris-data-used-in-crypto-programs/)

[6] CoinGape (https://coingape.com/beijing-cracks-down-on-crypto-iris-scanning-as-sam-altmans-worldcoin-faces-scrutiny/)

[7] AInvest (https://www.ainvest.com/news/china-warns-iris-data-collection-crypto-poses-national-security-risk-2508/)

[8] Crypto.news (https://crypto.news/worldcoin-under-fresh-scrutiny-china-warns-against-crypto-for-iris-trend/)

[9] 99Bitcoins (https://99bitcoins.com/news/altcoins/chinese-biometric-data-exploited-through-crypto-schemes-authorities-allege/)