Currently, promoting U Cards to users in mainland China carries policy risks.

Author: Deng Xiaoyu

In virtual currency activities, how to safely "withdraw funds" is a timeless topic. The U Card seems to offer a convenient way to consume without the need for withdrawal (it can also be considered that using the U Card is the safest form of withdrawal), thus it is very popular among cryptocurrency enthusiasts.

Many people have started promoting U Cards as a business. I often see advertisements for card opening discounts in communities and platforms, and frequently come across content on mainland video platforms that aims to popularize U Card knowledge, but in reality, encourages you to add private messages to purchase card opening services. It is unclear whether these promoters are merely collecting commissions from the card issuers or earning service fees from the cardholders.

However, lawyer Mankun hopes to use this article to highlight the risks of promoting U Cards, especially the legal risks when promoting U Cards to users in mainland China.

What is a U Card?

A U Card is a USDT bank card, and its core logic is to utilize the price stability of USDT (which is usually pegged to the US dollar) to provide users with a stable and convenient payment method. For example, when ordering a coffee at a café, we can complete the payment using a bank card linked to our WeChat Pay. If you hold a U Card, which is linked to a payment app, you can recharge it with USDT and use it for consumption in various physical scenarios.

Because USDT, as a stablecoin, is different from cryptocurrencies like BTC or ETH—whose values are highly volatile—it is more feasible for daily payments. Especially now, as stablecoin regulations are being passed in various places, there may be more stablecoin bank cards in the future, and the U Card is one such stablecoin bank card.

Currently, promoting U Cards to users in mainland China carries policy risks

At present, we have found that some U Card promoters have not been appointed by the project party (i.e., there is no project party paying for the promotional activities or commissions), but are individuals seeking to earn service fees for card opening, even taking on bulk card opening requests from mainland residents. The risks involved are multifaceted:

First, based on past announcements and notifications from the People's Bank of China and other institutions (such as the "924 Announcement"), as well as current judicial rulings in mainland China, it is clear that the mainland has expressed a negative attitude towards the exchange of cryptocurrencies and fiat currencies. The process of using U Cards for virtual currency transactions can easily violate the "red line" of our foreign exchange management system. If the authorities determine that the promoters are subjectively aware of and condone or indirectly support foreign exchange trading, they may be considered accomplices to the crime of "illegal business operations." Therefore, promoting U Cards to residents within mainland China should not use fiat currency exchange as a gimmick.

Secondly, as U Card promoters, it is also important to scrutinize the issuing institutions. This is similar to KOLs (Key Opinion Leaders) needing to review the legality of the projects they endorse.

Currently, U Card issuers generally include the following four types:

• Direct issuance by banks. Banks that are willing to accept stablecoins use their own payment networks and compliance frameworks to provide users with stable cryptocurrency payment solutions.

• Issuance in collaboration with cryptocurrency companies. In this case, banks provide traditional financial infrastructure, while third-party companies are responsible for managing and converting cryptocurrencies.

• Independent issuance by professional cryptocurrency payment companies. Some companies focused on cryptocurrency payments independently issue U Cards through partnerships with payment networks like Visa or MasterCard.

• SaaS model collaborative issuance. This refers to some third-party payment companies providing U Card issuance platforms for channel providers or other financial service providers through a SaaS (Software as a Service) model.

As promoters, it is crucial to choose well-known U Card providers to ensure the safety of funds. Promoters should avoid promoting niche or even unlicensed service providers, as these companies may not provide sufficient financial security and transaction safety measures, leading to property losses. As promoters targeting mainland users, they could easily be implicated in fraud cases.

Finally, and more importantly, U Card promoters should not assume that "as long as they do not directly use the U Card, merely promoting or facilitating card opening does not constitute a crime."

On a lighter note, some U Card issuers may not intend to conduct business with mainland residents. If promoters collect information from users in mainland China and assist with other visa materials to help open cards, they may violate the risk of fraudulently obtaining credit credentials in foreign jurisdictions. On the other hand, since U Card promoters begin collecting information from mainland residents to open cards, they inevitably need to address personal information protection issues. A significant leak of personal information could be deemed a crime.

On a more serious note, U Card promoters taking on the card opening responsibilities of the issuers assume the review obligations themselves. For example, if a cardholder provides false identity information to open a card, and the U Card promoter assists in completing the card opening, once money laundering activities occur, based on the investigative practices in mainland China, it will be presumed that the card opening personnel were aware of the criminal intent. Additionally, if a mainland resident needs to open multiple cards at once, it clearly indicates an intention to bypass foreign exchange limits or other abnormal usage, and the U Card promoter assisting in the card opening would also be implicated in related crimes.

Conclusion

U Cards and other stablecoin bank cards, as a convenient cryptocurrency payment method, are likely to become a way of life in the future. However, at present, as promoters, it is essential to carefully select issuers and understand relevant legal and compliance requirements as a basic requirement.

Currently, lawyer Mankun strongly advises against promoting U Cards to users in mainland China due to the policy risks involved. Even in the future, if the legal and regulatory framework for cryptocurrencies in mainland China becomes more relaxed and flexible, stablecoin bank card promoters should not participate in the card opening process to avoid taking on the review responsibilities that should belong to the issuers.

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