Worldcoin Faces New Scrutiny as China Issues Warning on Crypto-for-Iris Data Trend

China's national security agency has expressed concern over the rising trend of projects gathering sensitive biometric information, such as iris scans, in exchange for digital assets.

Key Takeaways:

China's Ministry of State Security warns against projects, like Worldcoin, collecting biometric data in exchange for digital assets.
The MSS highlights risks to privacy and national security from such practices.
Worldcoin, now rebranded to World, collects iris scans for verification in its digital identity system.
The project has faced bans and scrutiny in multiple countries due to privacy concerns.
The WLD token has significantly declined in value, raising apprehensions about potential future regulatory issues.

Worldcoin Faces New Scrutiny as China Issues Warning on Crypto-for-Iris Data Trend

In a public advisory shared on August 6 via its official WeChat account, China's Ministry of State Security (MSS) cautioned that biometric data—including facial recognition, fingerprints, and iris scans—are increasingly being collected under misleading circumstances, with some entities using cryptocurrency incentives as a lure.

The MSS highlighted that these activities present significant risks to individual privacy and national security. The advisory referenced previous instances where foreign entities obtained iris and facial data under the pretext of identity verification or token distribution, subsequently transferring that information for undisclosed reasons.

The agency stressed that mishandling such sensitive data could lead to identity impersonation, unauthorized access to secure facilities, and could even facilitate surveillance and espionage.

While the advisory did not specify any particular organization, its description closely resembles that of Worldcoin, a project that has frequently come under scrutiny for its controversial data collection model.

Worldcoin, which was recently renamed to World, was launched in July 2023 by Tools for Humanity, a tech company co-founded by Sam Altman, CEO of OpenAI. The initiative aims to create a global digital identity system known as “World ID,” requiring users to verify their identities by scanning their irises using a specialized device called the Orb.

In exchange for this biometric data, users receive the project's native token, WLD. Worldcoin claims its system differentiates humans from AI online and enhances financial accessibility, while purportedly offering a secure and anonymous identity verification method.

Despite its privacy-centric branding, World has encountered backlash in various regions regarding its biometric data collection and storage practices.

Since its launch, World has ignited significant controversy globally due to its operational methods. The Kenyan government was the first to issue a ban on the project in September 2023, just months after its launch, citing concerns about how it was acquiring and utilizing citizens' personal data.

Subsequently, the Office of the Privacy Commissioner for Personal Data in Hong Kong determined that Worldcoin had breached the city’s personal data guidelines, posing privacy risks. Similar concerns have been raised by several other regions, including France, Portugal, Spain, Brazil, and South Korea, compelling the project to exit some of these markets due to regulatory pressures.

Worldcoin defends its practices by asserting that biometric data is safeguarded through privacy-enhancing technologies, including zero-knowledge proofs. In October 2024, the platform underwent rebranding and launched a new layer-2 network, which it claims adheres to data protection regulations.

However, questions regarding the potential misuse or unauthorized distribution of biometric data continue to linger.

Meanwhile, the WLD token has been experiencing a downturn. As of the latest update, it is trading at $0.94, representing a nearly 45% decline over the past year and a staggering 90% drop from its peak value. This decline has primarily been driven by adverse regulatory pressures, and should issues arise from China's concern, the token may face additional downward pressure.