Author: Deng Xiaoyu
In virtual currency activities, how to safely "cash out" has been an enduring topic. U Card seems to provide a convenient way to consume without cashing out (it can also be considered that using U Card is the safest way to cash out), and thus is popular among crypto enthusiasts.
Many people have started promoting U Card, and the author often sees promotional advertisements for card opening 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 unclear 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 through this article, especially the legal risks of promoting U Card to Mainland users.
What is U Card?
U Card is a USDT bank card, with its core logic being to utilize the price stability of USDT stablecoin (USDT's value is typically 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 can pay through WeChat Pay linked to a bank card. If you have a U Card, the card can be linked to a payment app, and by topping up USDT, you can consume in various offline scenarios.
Because USDT stablecoin is different from cryptocurrencies like BTC or ETH - which have high value volatility - this makes it more feasible for daily payments. Especially as stablecoin legislation is being passed in various places, more stablecoin bank cards may appear in the future, with U Card being one such example.
Currently, promoting U Card to Mainland China users carries policy risks
Currently, we find that some U Card promoters are not appointed by the project team (meaning the project team is not paying for promotion or commissions), but are merely individuals seeking to earn card opening service fees by taking on card opening demands from Mainland residents, even batch card opening demands. The risks involved are multifaceted:
First, according to previous People's Bank and other unit announcements and notices (such as the "924 Announcement"), and current judicial decisions in Mainland China, it is clear that Mainland China has expressed a negative attitude towards cryptocurrency and fiat currency exchange. The process of using U Card for virtual currency trading easily crosses the "red line" of China's foreign exchange management system. If law enforcement determines that the promoter is knowingly, tolerating, or covertly supporting foreign exchange trading, the promoter may be considered an accomplice to "illegal business operations". Therefore, when promoting U Card to Mainland China 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 KOLs bringing in customers, which requires examining the project's legality.
Currently, U Card issuers generally include the following 4 types:
Direct bank issuance. Banks willing to accept stablecoins, using their payment network and compliance framework to provide users with stable cryptocurrency payment solutions.
Joint issuance by banks and crypto companies. In this case, banks provide traditional financial infrastructure, while third-party companies manage and convert cryptocurrencies.
Independent issuance by professional crypto payment companies. Some companies focused on crypto payments independently issue U Cards by collaborating with payment networks like Visa or MasterCard.
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 (Software as a Service) 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, they are highly likely to be investigated for fraud.
Lastly, and more importantly, U Card promoters cannot assume that "as long as they do not directly use the U Card, but merely promote and assist in card application, they do not constitute a crime".
On a lighter note, on one hand, some U Card issuers do not intend to do business with Mainland residents. Promoters collecting Mainland user information and assisting with other visa documents to help open cards may risk fraudulently obtaining credit credentials in foreign jurisdictions. On the other hand, U Card promoters who begin collecting Mainland resident information for card opening inevitably face personal information protection issues. Personal information leakage reaching a certain quantity might be deemed a crime.
On a more serious note, U Card promoters who assist in card opening are taking on the card issuer's review responsibilities. For example, if a card opener provides false identity information to open a card, and the U Card promoter assists in completing the process, once money laundering occurs, based on Mainland law enforcement practices, it will be presumed that the card opening personnel knowingly intended to commit a crime. Another example would be if a Mainland resident needs to open multiple cards at once, clearly intending to bypass foreign exchange limits or for other abnormal uses. U Card promoters assisting in such card openings would also be involved in associated crimes.
Summary
U Card and other stablecoin bank cards, as a convenient cryptocurrency payment method, are believed to become a future lifestyle. However, currently, promoters need to be cautious in choosing issuers and understanding relevant legal and compliance requirements.
Currently, Mankun Lawyer strongly advises against promoting U Card to Mainland China users due to policy risks. Even in the future, when cryptocurrency laws and regulatory frameworks in Mainland China become more relaxed and flexible, stablecoin bank card promoters should not participate in card opening assistance to avoid taking on the review responsibilities that should belong to the card issuer.
