China Warns Against Iris-Scanning Crypto Schemes, Citing National Security Risks

China’s Ministry of State Security (MSS) has issued a stern warning about the growing use of iris-scanning technology in cryptocurrency projects, highlighting serious threats to personal privacy and national security.

The alert comes amid rising global scrutiny of crypto initiatives like Worldcoin, which incentivize users to submit biometric data, especially iris scans, in exchange for digital tokens.

Foreign Crypto Firms Accused of Harvesting Sensitive Biometrics

In a bulletin published on its official WeChat account, the MSS revealed that some overseas entities are allegedly using deceptive token giveaway schemes to gather sensitive biometric information from unsuspecting participants. These firms reportedly collect and transmit iris scans abroad under the guise of digital identity verification.

Though the MSS did not name any particular project, the description closely resembles Worldcoin, a crypto initiative co-founded by OpenAI CEO Sam Altman. Worldcoin uses specialized “orb” devices to scan individuals’ irises in return for WLD tokens, claiming the process enables proof-of-humanity for digital identity.

However, critics argue that once such biometric data is compromised, the consequences are irreversible. Unlike passwords or personal IDs, iris data cannot be changed, making it a permanent key to a person’s identity. The MSS cautioned that improperly stored or transferred data could be used for espionage, identity theft, or unauthorized surveillance.

Crackdown on Transnational Cybercrime Deepens

The warning comes just days after 27 Chinese nationals were arrested in the Philippines’ Clark Freeport zone during a police raid on a cryptocurrency investment scam hub. Authorities discovered illegal offshore gaming operations and seized dozens of electronic devices used in phishing and scam-related activities.

Police said the scam syndicate operated under the façade of crypto investments, echoing China’s broader concerns over how digital assets can be weaponized to exploit personal and national vulnerabilities. Officials emphasized that such activities form part of an intensified regional crackdown on cybercrime and illegal online gaming.

Blockchain Leaders Urge New Privacy Standards

The alarm over biometric misuse is not limited to China. Leading voices in the crypto world are calling for alternatives.

Ethereum co-founder Vitalik Buterin recently proposed a “pluralistic identity” model, advocating for identity verification systems that do not rely solely on centralized biometric data. Instead, he suggests blending trust sources, from governments to community attestations, to preserve user anonymity.

As blockchain-based identification tools become more popular, data security and privacy concerns are escalating. China’s response signals a global trend toward tighter regulation of biometric data collection, particularly in sectors where privacy violations could have long-term geopolitical consequences.