Mankun Lawyer hopes to highlight the risks of U card promotion, especially the legal risks of promoting U cards to mainland users.
Author: Lawyer Deng Xiaoyu, Mankun Blockchain Legal Services
In virtual currency activities, how to safely "cash out" is an enduring topic. The U card seems to provide a convenient way to consume without cashing out (it can also be considered that using a U card is the safest way to cash out), and therefore is popular among crypto enthusiasts.
Many people have started promoting U cards, and the author often sees advertisements for card opening offers in communities and platforms, and frequently sees content on mainland video platforms that ostensibly popularize U card knowledge but actually aim to have you add contacts to purchase card opening services. It is unknown whether these promoters are simply collecting commissions from the card issuer or earning service fees from card openers.
However, Mankun Lawyer hopes to highlight the risks of U card promotion, especially the legal risks of promoting U cards to mainland users.
What is a U Card?
A U card is a USDT bank card, with its core logic being to utilize the price stability of USDT stablecoin (USDT's value is usually pegged to the US dollar) to provide users with a stable and convenient payment method. A specific scenario would be, for example, ordering a coffee at a coffee shop, where we typically use WeChat Pay linked to a bank card. If you have a U card, the card is bound to a payment app, and by topping up USDT, you can consume in various offline scenarios.
Because USDT, as a stablecoin, is different from cryptocurrencies like BTC or ETH with high price volatility, it is more feasible for daily payments. Especially now, as stablecoin legislation is being passed in various places, there may be more stablecoin bank cards in the future, and the U card is one such example.
Currently, promoting U cards to mainland Chinese users carries policy risks
At present, we find that some U card promoters are not appointed by project parties (meaning no project party is paying for promotion or commission), but are merely individuals seeking to earn card opening service fees, accepting card opening demands from mainland residents, even in bulk. The risks involved are multifaceted:
First, based on previous announcements and notices from mainland authorities like the People's Bank of China (such as the "924 Announcement") and current judicial decisions, it is clear that mainland China has expressed a negative attitude towards cryptocurrency and fiat currency exchange. The process of using a U card for virtual currency trading is very likely to cross the "red line" of China's foreign exchange management system. If law enforcement determines that the promoter is knowingly, tolerating, or implicitly supporting foreign exchange trading, the promoter might be considered an accomplice to "illegal business operations". Therefore, when promoting U cards to mainland residents, one cannot use fiat currency exchange as a selling point.
Secondly, as a U card promoter, one should also focus on examining the card-issuing institution. This is similar to how KOLs review a project's legality.
Currently, U card issuers mainly include the following 4 types:
1. Direct bank issuance. Banks willing to accept stablecoins, using their payment network and compliance framework to provide users with a stable cryptocurrency payment solution.
2. Joint issuance by banks and cryptocurrency companies. In this case, banks provide traditional financial infrastructure, while third-party companies are responsible for cryptocurrency management and conversion.
3. Independent issuance by professional crypto payment companies. Some companies focused on cryptocurrency payments independently issue U cards by collaborating with payment networks like Visa or MasterCard.
4. SaaS collaborative issuance. This refers to third-party payment companies providing U card issuance platforms for channel merchants or other financial service providers through a SaaS model.
Therefore, for promoters, choosing a well-known U card provider is crucial to ensure fund safety. Promoters should avoid promoting niche or unlicensed service providers. Even if these companies are not fund pools, their inability to provide sufficient fund guarantees and transaction security measures could lead to property losses. For promoters targeting mainland users, there is a high risk of being investigated for fraud.
Lastly, and most importantly, U card promoters must not assume that "as long as they do not directly use the U card and are merely promoting or assisting with card applications, they do not commit a crime".
On the lighter side, on one hand, some U card issuers do not intend to do business with mainland residents, so promoters collecting mainland user information and assisting with visa documents to open cards may risk violating foreign judicial jurisdiction's credit document impersonation. On the other hand, once U card promoters begin collecting mainland resident information for card opening, they inevitably face personal information protection issues. Personal information leakage reaching a certain quantity might be deemed a crime.
From a serious perspective, U card promoters acting on behalf of card issuance is essentially taking on the card issuer's review responsibilities. For example: If the cardholder provides false identity information for card issuance, and the U card promoter assists in completing the card issuance, once money laundering occurs, based on mainland investigation practices, it will be presumed that the assisting personnel knowingly had criminal intent. Another example, if a mainland resident needs to open multiple cards at once, which obviously indicates an intention to bypass foreign exchange limits or use them abnormally, the U card promoter assisting in card issuance will also be involved in associated criminal activities.
Summary
U cards and other stablecoin bank cards, as a convenient crypto payment method, are believed to become a future lifestyle. However, currently, promoters need to be cautious when choosing issuers and understand the relevant legal and compliance requirements as a basic requirement.
Currently, Mankun Lawyer strongly advises against promoting U cards to mainland Chinese users due to policy risks. Even in the future, when the crypto legal and regulatory framework in mainland becomes more relaxed and flexible, stablecoin bank card promoters should not participate in card issuance assistance to avoid taking on the review responsibilities that should be borne by the card issuer.
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