China Warns Iris-Scanning Crypto Projects Threaten National Security and Privacy

China has issued a formal warning against cryptocurrency projects that use iris scanning technology, citing potential threats to personal privacy and national security. The Ministry of State Security (MSS) emphasized that foreign firms are collecting biometric data under the guise of cryptocurrency initiatives, raising concerns that such information could be exploited for surveillance or espionage [1]. The government specifically highlighted projects similar to Worldcoin, a project co-founded by Sam Altman, which utilizes an iris-scanning device called an Orb to verify user identities [4]. While Worldcoin’s operations are not directly active in China, the government’s warning signals a broader skepticism toward any initiative that links financial incentives with the collection of sensitive biometric data [3].

The MSS has urged the public to exercise caution with any cryptocurrency schemes offering rewards in exchange for personal biometric information, warning that such practices could undermine both individual privacy and state security [6]. The ministry also noted that the misuse of iris scans or facial recognition could be leveraged to create long-term identification systems that violate user autonomy and expose individuals to potential surveillance [2].

The regulatory warning has had immediate market consequences. Following the announcement, Worldcoin’s native token, WLD, experienced a 4% decline in value as investors reacted to the increased scrutiny [1]. The drop reflects growing concerns among market participants about the regulatory risks associated with biometric-based crypto projects. The response also highlights the sensitivity of digital assets to regulatory announcements, particularly in markets where compliance and data security are tightly controlled [6].

Chinese authorities have not limited their warnings to iris scanning alone. They have also expressed concerns about the broader use of biometric data in the cryptocurrency space, including face recognition technology. The Ministry of National Security has pointed to the potential for these technologies to be used in ways that threaten both privacy and national sovereignty [2]. This signals a shift in regulatory priorities, with Chinese regulators increasingly prioritizing data control and security in the digital economy.

The warnings come amid growing global scrutiny of biometric data use in cryptocurrency initiatives. Regulators in countries such as Germany, France, and Kenya have previously raised concerns over similar projects, focusing on issues of consent and privacy [1]. These developments suggest that the regulatory landscape for biometric-based crypto projects is becoming more complex, with potential for broader international policy shifts in the coming months [3].

China’s stance underscores its broader strategy of maintaining control over sensitive data within the digital economy. By highlighting the risks associated with foreign biometric-based crypto projects, the government is reinforcing its commitment to protecting national security in the digital age [7]. The warnings also suggest that further regulatory measures may be on the horizon, with authorities likely to continue monitoring and possibly restricting such initiatives to prevent potential data exploitation [5].

Source:

[1] China Warns Iris-Scanning Crypto Projects Pose National Security Risk

(Cointelegraph) https://cointelegraph.com/news/china-warns-iris-scanning-crypto-projects-national-security-risk

[2] Chinese Ministry of National Security Warns of Risks

(Bitcoin.com) https://news.bitcoin.com/chinese-ministry-of-national-security-warns-of-risks-associated-with-biometric-recognition-technology/

[3] China Warns Worldcoin-Style Iris Scanning a National Security Threat

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

[4] Crypto Iris Scans Raise Red Flags, Says China's MSS

(BitDegree) https://www.bitdegree.org/crypto/news/crypto-iris-scans-raise-red-flags-says-chinas-ministry-of-state-security

[5] Chinese Biometric Data Linked to Espionage Risks

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

[6] Eye-scanning crypto projects pose national security risks

(TradingView) https://www.tradingview.com/news/cointelegraph:cbcdef993094b:0-eye-scanning-crypto-projects-pose-national-security-risks-china-warns/

[7] China Issues Warning on Biometric Data Risks from Crypto

(Holder.io) https://holder.io/news/china-warning-biometric-data-crypto/