Author: Lawyer Deng Xiaoyu
In virtual currency activities, how to safely withdraw money is a perennial topic. U Card seems to provide a convenient way to spend money without withdrawing money (it can also be considered that using U Card is the safest way to withdraw money), so it is very popular among people in the currency circle.
Many people have started the U card promotion business. I often see advertisements for card opening discounts on social networks and platforms, and I often see content on mainland video platforms that uses the knowledge of U cards to popularize them, but actually asks you to add private messages to purchase card opening services. It is unknown whether these promoters only collect commissions from card issuers or earn service fees from cardholders.
But attorney Mankiw hopes that through this article, we can point out the risks of promoting U cards, especially the legal risks of promoting U cards to mainland users.
What is a U-Card?
U card is a USDT bank card. Its core logic is to use the price stability of stablecoins such as USDT (the value of USDT is usually pegged to the US dollar) to provide users with a stable and convenient means of payment . For example, if you order a cup of coffee in a coffee shop, you can bind a bank card to WeChat Pay to complete the consumption. If you hold a U card, the card is bound to the payment software, and you recharge USDT into the card, you can consume in various offline physical scenarios.
Because stablecoins like USDT are different from cryptocurrencies such as BTC or ETH - the currency value fluctuates greatly - this makes it more feasible for daily payments. In particular, as stablecoin bills are passed in various places, more stablecoin bank cards may appear in the future, and U Card is one of them.
There are policy risks in promoting U cards to users in mainland China
At present, we have found that some U card promoters have not been assigned by the project party (that is, no project party pays for the promotion activities or pays commissions), but have taken on the card opening needs of mainland residents, even in batches, just to earn card opening service fees. The risks involved are multifaceted:
First, according to the previous announcements and notifications of the People's Bank of China and other units in the mainland (such as the "924 Announcement"), as well as the current judicial decisions in the mainland, it can be seen that the mainland has clearly expressed a negative attitude towards the exchange of cryptocurrencies and legal tender. The process of using U cards to buy and sell virtual currencies is very easy to touch the "red line" of China's foreign exchange management system . Once the case handling agency determines that the promoter is subjectively aware of, condoning, and supporting foreign exchange trading in disguise, the promoter may constitute an accomplice to the "illegal business crime." Therefore, when promoting U cards to residents in mainland China, legal tender exchange shall not be used as a gimmick.
Secondly, as a U card promoter, you should also pay attention to the review of the card issuing institution. This is like a KOL bringing an order, and you need to review the legitimacy of the project.
Currently, there are four types of U card issuers:
1. Direct issuance by banks. Banks themselves are willing to accept stablecoins and use their own payment networks and compliance frameworks to provide users with stable cryptocurrency payment solutions.
2. Banks cooperate with cryptocurrency companies to issue. In this case, banks provide traditional financial infrastructure, while third-party companies are responsible for the management and conversion of cryptocurrencies.
3. Independent issuance by professional crypto payment companies. Some companies specializing in cryptocurrency payments independently issue U cards by cooperating with payment networks such as Visa or MasterCard.
4. SaaS model cooperative issuance. This refers to some third-party payment companies providing U card issuance platforms to channel merchants or other financial service providers through the SaaS (Software as a Service) model.
As a promoter, it is very important to choose a well-known U card provider to ensure the safety of funds. Promoters should avoid promoting niche or even unlicensed service providers. Even if these companies are not Ponzi schemes, they cannot provide sufficient financial guarantees and transaction security measures, resulting in property losses. As promoters targeting mainland users, they are very likely to be filed for fraud.
Finally, but more importantly, U-card promoters cannot think that "as long as they do not directly use the U-card, merely promoting or applying for the card on behalf of others does not constitute a crime."
On the lighter side, on the one hand, some U card issuers do not intend to expand their business to mainland residents. Promoters collect information of mainland Chinese users and assist in opening cards with other visa materials, which may violate the risk of fraudulently obtaining credit certificates in foreign jurisdictions. On the other hand, since U card promoters have begun to collect information of mainland residents to open cards, they will inevitably have to bear the problem of personal information protection. If the amount of personal information leaked reaches a certain level, it may be considered a crime.
From a serious perspective, U card promoters take over the review obligations of the card issuer by opening cards on behalf of others. For example, if the cardholder provides false identity information to open a card, and the U card promoter assists in completing the card opening, once money laundering occurs, according to the practice of handling cases in mainland China, it will be presumed that the person assisting in opening the card knew the criminal intent. For another example, if a mainland resident needs to open multiple cards at one time, it is obvious that there is an intention to exceed the foreign exchange limit or other abnormal use. If the U card promoter assists in completing the card opening, it will also be involved in related crimes.
summary
As a convenient cryptocurrency payment method, stablecoin bank cards such as U Card will become a lifestyle in the future. However, as a promoter, you need to carefully choose the issuer when promoting, and understand the relevant legal and compliance requirements as a basic requirement.
At present, Mankiw strongly advises against promoting U cards to users in mainland China, as there are policy risks. Even if the cryptocurrency laws and regulatory frameworks in mainland China become more relaxed and flexible in the future, promoters of stablecoin bank cards should not participate in assisting in card opening, so as to avoid taking on the review responsibilities that the card issuer should bear.
