China Warns Iris-Scanning Crypto Projects Pose National Security Risk

China’s Ministry of State Security (MSS) has issued a public warning over the national security risks linked to cryptocurrency projects that use iris-scanning technology as part of their onboarding processes. The advisory, published on August 6 via the MSS’s official WeChat channel, highlights concerns over how such projects may exploit biometric data under the guise of digital asset distribution [1]. These initiatives, which often offer crypto tokens in exchange for biometric information, are seen as potential vectors for large-scale surveillance, identity fraud, and cyber espionage [2].

The MSS did not name any specific project but referenced a case involving an unnamed overseas company that collected iris data globally by offering cryptocurrency tokens. This method, which involves scanning users’ eyes to verify identity, is particularly concerning due to the permanent nature of biometric data [3]. Unlike passwords or even fingerprints, iris patterns cannot be altered once compromised, making them a highly sensitive type of personal information [4].

The advisory noted that many of these projects employ a standard “Know Your Customer” (KYC) process, which often includes biometric verification, to onboard users. However, this practice has been criticized as misleading, as individuals may not be fully aware of the long-term consequences of sharing such data [5]. The MSS emphasized that if foreign actors gained access to a centralized biometric database, they could use it for a range of malicious purposes, including impersonation, unauthorized system access, or even state-sponsored espionage [6].

The agency also pointed to the broader risks posed by the misuse of biometric data, particularly in the context of national security. It cited examples of foreign intelligence agencies using falsified facial data to conduct infiltration operations, underscoring the real-world dangers of data leaks [7]. The MSS urged the public to be cautious when providing biometric information, especially in exchange for digital tokens, and stressed the need for stronger security measures to protect such data [8].

This warning aligns with a growing global conversation about the intersection of cryptocurrency, data privacy, and national security. As digital currencies increasingly rely on advanced authentication methods, governments are taking a closer look at how these technologies can be weaponized. The MSS’s statements indicate that China is actively monitoring these developments and is prepared to take regulatory actions if necessary [9].

The advisory has also drawn attention to the broader implications for the crypto industry, particularly regarding the ethical handling of biometric data. Experts argue that while such technologies can offer convenience and efficiency, they also introduce significant security vulnerabilities that require careful management [10]. The MSS’s stance reflects an increasing global trend of regulatory scrutiny over how biometric data is collected, stored, and used in the digital age.

As the situation continues to evolve, the MSS has not announced any immediate enforcement actions but has encouraged the public to remain informed and vigilant. The agency’s warnings serve as a clear message that the use of biometric data in cryptocurrency projects will be closely watched for potential threats to national interests [11].

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[1] China Warns Worldcoin-Style Iris Scanning a National ... (https://www.coindesk.com/policy/2025/08/06/china-warns-worldcoin-style-iris-scanning-a-national-security-threat)

[2] China Warns Iris-Scanning Crypto Projects Pose National ... (https://cointelegraph.com/news/china-warns-iris-scanning-crypto-projects-national-security-risk)

[3] Urgent Alert: China Warns Against Foreign Firms Collecting Iris Information via Crypto Tokens (https://coinstats.app/news/9ea7290d021050614d384434ed75148924d3bff8048c67c2d06168e0e4fefe60_Urgent-Alert-China-Warns-Against-Foreign-Firms-Collecting-Iris-Information-via-Crypto-Tokens)

[4] China Accuses Foreign Entity of Misusing ... (https://cryptonews.com/news/china-accuses-foreign-firm-misusing-crypto-surveillance-iris-scanning/)

[5] China Warns of Security Risks From Global Iris Scan ... (https://thecryptobasic.com/2025/08/06/china-warns-of-security-risks-from-global-iris-scan-collection-linked-to-crypto-rewards/)

[6] Iris Scan Crypto Security Threat by China Question Worldcoin (https://www.coingabbar.com/en/crypto-currency-news/iris-scan-crypto-security-threat-by-china-question-worldcoin?srsltid=AfmBOorxc0l1TB370vA3sW1uGlUCrsICMgOusDsnyCsO_EW-GQLz3qLr)

[10] China Accuses Foreign Entity of Misusing Crypto for ... (https://www.coinlive.com/news-flash/865628)