On September 28, China provided two entirely different official statements regarding two categories of digital technology. On one side, the Ministry of National Security of China published an article titled "Virtual Currency Crimes Cannot Be Traced? You Think Too Much!" which directly declared that the so-called "anonymity" of virtual currencies is fundamentally a false proposition, emphasizing that blockchain is open and transparent, data on the chain cannot be tampered with, and complete transaction records can support full link tracing, incorporating risks associated with virtual currency into national security narratives related to money laundering, cyber attacks, and espionage. On the other side, according to a single source, during the interpretation of the results of the eighth round of US-China economic and trade consultations, the head of the Ministry of Commerce's Department of American and Oceanian Affairs confirmed that the US and China have established and held their first dialogue on artificial intelligence under this framework, led by Chinese Vice Premier He Lifeng and an American official of Treasury Secretary level referred to as "Bessent". The two sides also agreed to continue the dialogue "before the end of November this year," but no more specific agenda or results have been seen in the publicly available materials. The two messages from the national security and economic and trade departments on the same day—one reinforcing the qualitative assessment of the security risks of virtual currencies and the other expressing a stance on dialogue and cooperation in AI governance—constitute a sharp contrast. This article will start from these two signals to discuss the differentiated dual-track orientation that China is revealing in digital technology governance.
Ministry of National Security Voices: The Myth of Encrypted Anonymity is Shattered in the Context of National Security
On September 28, the Ministry of National Security threw out an article titled "Virtual Currency Crimes Cannot Be Traced? You Think Too Much!" on its official account, with this classification no longer coming from financial regulatory lines, but instead directly from national security agencies. The article begins by naming the so-called "anonymity" of virtual currencies as fundamentally a false proposition, emphasizing the technical characteristics of blockchain being "open, transparent, and data on the chain is immutable," pointing out that the complete transaction record itself provides the basis for full link tracing. For the encrypted world that has long relied on the narrative of "anonymity" to package a technically neutral product, this essentially strips away a key veil of secrecy at the regulatory discourse level.
Furthermore, it is notable that the Ministry of National Security does not only define the risk as "disruption to financial markets" or "investment scams," but rather directly incorporates virtual currencies into the national security narrative. The article identifies them as an important tool for criminals engaging in various illegal activities, clearly listing scenarios such as money laundering, cyber attacks, and espionage, pointing to more sensitive areas such as cross-border payment links, information infrastructure, and intelligence security. When the regulatory focus shifts from "investor protection" and "anti-illegal fundraising" to being confirmed by national security agencies regarding the types and boundaries of crypto risks, the myth of encrypted anonymity is denied not only as a technical proposition but also in terms of its legitimacy within the governance system of China.
Full Link Tracing on the Chain is Named: The Collision of Anonymity Narrative and Regulatory Capacity
In the article titled "Crimes Cannot Be Traced? You Think Too Much!", the Ministry of National Security redefined the structure on the chain: it is not a "naturally anonymous black box," but a database inherently suitable for evidence collection. The official repeatedly emphasizes that blockchain is "open and transparent, with data on the chain being immutable," meaning that each transfer, and every flow of funds between addresses is permanently recorded on the same timeline, creating a complete, continuous, and irremovable record. This timeline is referred to in the official narrative as the basis for "full link tracing"—the myth of "cannot be traced" is openly denied with the phrase "you think too much," forming a direct conflict with promotional narratives of projects that have long advertised themselves as "anonymous" and "private." For those accustomed to frequently changing addresses, splitting funds in layers, and circulating them through cross-border channels, this expression conveys not technical details but an attitude: from a regulatory perspective, what matters is not the single point of concealment but whether the entire path is fully preserved.
However, compared to this strong rhetoric, the information currently available in public materials still remains at a theoretical level: the article only states that the characteristics of "open, transparent, and immutable" can support full link tracing, without providing any specific law enforcement cases, technical solutions, or actual tools, nor demonstrating any real address path that has been completely restored. In other words, the regulatory "visibility" of the on-chain world is declared to exist in principle but has yet to be quantified or exemplified in the public sphere; what the market can currently confirm is merely that the anonymity rhetoric has been almost positively denied, while how far regulation can actually go on-chain remains an undecided observational variable.
Another Hand Reaches Out to AI: US and China Set Up Dialogue to Discuss Risks and Benefits
On the same day when the security department raised a red flag for the on-chain world, according to a single source, the head of the Ministry of Commerce's Department of American and Oceanian Affairs disclosed another clue while interpreting the results of the eighth round of US-China economic and trade consultations—China and the US agreed to establish an artificial intelligence dialogue mechanism within the economic and trade framework. According to this official, this is not an abstract statement but has already been put into practice: the two sides have held the first dialogue on artificial intelligence, with the topic directly addressing "AI risks and benefits", led at the level of Chinese Vice Premier He Lifeng and an official of Treasury Secretary level referred to as "Bessent", thus directly incorporating AI into the table of negotiations on economic trade and technology governance.
This source also stated that both sides agreed to hold another dialogue "before the end of November this year," providing a clear time window for this newly established communication channel, projecting an attitude of maintaining communication on AI governance, rather than unilaterally setting rules. However, currently, all available information on these two rounds of dialogue is almost condensed into this interpretation: specific agendas have not been disclosed, there are no details on which risks were discussed or how the so-called "benefits" will be balanced, nor are there any verifiable details of outcomes. To the outside world, this feels more like a framework arrangement confirmed by official statements but lacking in detail, and it remains to be seen to what extent it can shape the future AI regulatory order—a question that can only be treated as an open variable needing time for validation.
Dual Signals on the Same Day: Contrast of Digital Governance between Suppressing Cryptos and Embracing AI
Placed on a timeline, September 28 is clearly divided into two parts: on one side is the Ministry of National Security publishing an article that names the so-called "anonymity" of virtual currencies as fundamentally a false proposition, emphasizing the open and transparent nature of the chain, the full link traceability, and packaging it with a bundle of security risks such as money laundering, cyber attacks, and espionage into the national security narrative; on the other side, a report from a single source states that the head of the Ministry of Commerce's Department of American and Oceanian Affairs confirmed that the US and China have established and initiated AI dialogue, discussing "risks and benefits," managing risks, and sharing benefits through dialogue. Two departments, two types of technological subjects, provided almost opposite tones on the same day: one defines it as a "criminal tool" that needs to be restrained, while the other includes it in a list of topics that can sustain communication and cooperation.
Currently, there is no public material that indicates a direct causal chain between these two messages, and the specific agenda and outcomes of the AI dialogue are only evident from this single source, with details still being highly scarce. However, their temporal overlap still outlines a clear policy framework: in the official context of China, virtual currencies seem to be actively elevated to a risk source at the national security level, while artificial intelligence is incorporated into the category of strategic technologies that can be negotiated, coordinated, and explored for "common rules" within the US-China framework. For the crypto industry, this juxtaposition itself is a signal—while both are digital technologies, one is systematically alerted to, and the other is seen as something that can be discussed at high-level dialogue, subtly rearranging the regulatory priorities.
Reality Check for Crypto Players: Privacy Narratives Must Coexist with Sovereign Traceability
When the Ministry of National Security publicly classified the "anonymity" of virtual currencies as a false proposition on September 28, emphasizing that on-chain data is sufficient to support full link tracing, and listing it alongside money laundering, cyber attacks, and espionage as national security risks, the narrative of "absolute anonymity" and "natural safe harbor" long invoked in the crypto world was effectively erased from the top regulatory level. For those in the Chinese narrative field trying to develop products and ecosystems, the more realistic premise is no longer "how to escape visibility" but rather acknowledging that "sovereign traceability" has been written into the regulatory backdrop. In designing wallets, protocols, and outward rhetoric, privacy claims should be rewritten into minimal exposure and differential visibility within an auditable framework, rather than implying to users that they can completely break away from regulation. Regulatory expectations also need to be calibrated: information publicly reveals that China maintains a high-pressure stance on virtual currencies, and this article has merely escalated this direction to the level of national security discourse; rather than betting on a short-term policy thaw, it is more prudent to view this statement as a reference coordinate for judging boundaries in the coming years. What is truly worth observing next is whether security agencies will fulfill the narrative of "full link tracing" with more case disclosures, and whether US-China AI dialogues will extend to issues such as data and algorithm governance—there is currently no evidence to suggest it will directly rewrite cryptocurrency regulation, but how these two lines tighten or overflow will jointly determine the actual survival space of on-chain activities within Chinese narratives and policies.
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