China’s Ministry of State Security (MSS) has raised alarms over a foreign company’s (likely Worldcoin) collection of biometric data from users in exchange for cryptocurrency rewards, calling the practice a potential threat to both individual privacy and national security.
The warning, published Wednesday on the agency’s official WeChat account, pointed to documented cases of large-scale iris data collection linked to crypto token distributions.
While the MSS did not explicitly name the project, the description closely aligns with Worldcoin, a project developed by Tools for Humanity. Worldcoin has gained attention for using its “orb” devices to scan users’ irises to create unique digital IDs and distribute its cryptocurrency token, WLD.
According to the MSS, the transfer of these sensitive data sources to external entities “poses risks not only to personal privacy but also to the country’s national security,” as biometric information can potentially be exploited beyond its stated purpose.
Growing Global Scrutiny of Biometric Crypto Projects
China’s warning adds to mounting global scrutiny over biometric data collection in the digital asset industry. Worldcoin, launched in 2023, has faced investigations and regulatory actions in multiple jurisdictions, primarily over concerns surrounding data protection and user consent.
In May, Indonesian authorities suspended the project’s operating permit following reports of irregularities related to Worldcoin’s identity verification services. Tools for Humanity later stated that World voluntarily paused its proof-of-personhood operations in Indonesia while seeking clarity on licensing requirements.
This is not the first time China has voiced concerns about crypto-linked risks. The country has long maintained strict policies on digital asset trading and initial coin offerings (ICOs), emphasizing consumer protection and financial stability.
Last month, Shenzhen’s financial regulator issued an alert warning citizens about fraudulent schemes disguised as stablecoin investments.
The MSS statement expands the scope of concern, highlighting how biometric data collection linked to crypto incentives can cross into national security territory, particularly if foreign entities manage or store sensitive information.
Implications for Privacy and Regulation in the Crypto Space
The latest development reflects a broader debate around privacy, identity verification, and decentralized finance. Projects like Worldcoin argue that iris scans enable a secure and scalable method of proving human identity online, which could help distinguish real users from automated bots in Web3 applications.
Critics, however, have cautioned that once biometric data is collected, the risk of misuse or unauthorized access remains high, even if encrypted or anonymized.
China’s public statement suggests that the country may increase oversight of foreign crypto projects operating within its jurisdiction or collecting data from Chinese nationals.
This aligns with global regulatory trends, where authorities are seeking to strike a balance between technological innovation and the protection of sensitive personal information.
In Europe, data regulators have opened probes into Worldcoin’s activities under the General Data Protection Regulation (GDPR), while Kenya temporarily halted Worldcoin registrations over similar privacy concerns in 2023.
The MSS has urged the public to exercise caution when approached with offers to exchange personal data for cryptocurrency rewards.
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