What are the legal risks of promoting U cards in many countries to Mainland China?
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What are the legal risks of promoting U cards in many countries to Mainland China?
Promoting the U Card to users in mainland China carries policy-related risks.
Navigating Web3 tides with focused insightsAuthor: Deng Xiaoyu
In cryptocurrency-related activities, how to securely "cash out" remains a perennial topic. U cards appear to offer a convenient way to spend without actually cashing out (one could even argue that using a U card is the safest form of cashing out), making them highly popular among crypto enthusiasts.
As a result, many people have turned U card promotion into a business. The author frequently sees advertisements for card-opening discounts in online communities and platforms, and often comes across content on mainland Chinese video platforms that purport to educate viewers about U cards but ultimately aim to get users to send private messages to purchase card issuance services. It's unclear whether these promoters earn only referral commissions from issuers or also charge service fees directly from applicants.
However, Manqin Law hopes this article will highlight the risks associated with promoting U cards—especially the legal risks involved in marketing U cards to users in mainland China.
What Is a U Card?
A U card, or USDT debit card, operates on the principle of leveraging the price stability of USDT—a stablecoin typically pegged to the U.S. dollar—to provide users with a stable and convenient payment method. In practice, just as one might bind a bank card to WeChat Pay to buy a cup of coffee at a café, if you hold a U card linked to a payment app and top it up with USDT, you can make purchases across various offline physical merchants.
Unlike volatile cryptocurrencies such as Bitcoin (BTC) or Ethereum (ETH), stablecoins like USDT are far more feasible for daily transactions. Moreover, with stablecoin legislation being gradually adopted worldwide, we may see an increasing number of stablecoin-linked debit cards in the future—U cards being one such example.
Promoting U Cards to Mainland Chinese Users Carries Policy Risks
Currently, some U card promoters do not operate under official sponsorship by project issuers (i.e., they aren't paid or commissioned by any issuing entity). Instead, individuals independently fulfill card application demands—from individual to bulk requests—from mainland residents solely to earn service fees. This practice brings multiple layers of risk:
First, according to past announcements and notices issued by institutions such as the People's Bank of China (e.g., the "September 24 Notice") and prevailing judicial precedents in mainland China, authorities have clearly expressed opposition toward converting between cryptocurrencies and fiat currencies. Using U cards for cryptocurrency trading easily crosses red lines under China’s foreign exchange control system. If law enforcement determines that a promoter knowingly facilitated, condoned, or indirectly supported foreign exchange trading, the promoter could be deemed an accomplice to the crime of illegal business operations. Therefore, marketing U cards to residents within mainland China must not emphasize their use for fiat currency conversion.
Second, as a U card promoter, due diligence on the card issuer is essential—similar to how influencers (KOLs) should verify the legality of projects they endorse.
Currently, U card issuers generally fall into four categories:
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Direct issuance by banks. Banks that accept stablecoins leverage their own payment networks and compliance frameworks to offer users secure cryptocurrency payment solutions.
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Joint issuance by banks and cryptocurrency firms. In this model, traditional financial infrastructure is provided by the bank, while a third-party company manages cryptocurrency handling and conversion.
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Independent issuance by specialized crypto payment companies. Some companies focused exclusively on crypto payments issue U cards independently through partnerships with global payment networks such as Visa or Mastercard.
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Co-issuance via SaaS models. Third-party payment providers offer U card issuance platforms to resellers or other financial service providers through Software-as-a-Service (SaaS) models.
For promoters, selecting well-known and reputable U card providers is crucial to ensuring fund security. Promoters should avoid endorsing niche or unlicensed service providers. Even if such companies aren't outright Ponzi schemes, their lack of adequate financial safeguards and transaction security measures may lead to user losses. In such cases, promoters targeting mainland users could potentially face criminal charges for fraud.
Lastly, and more importantly, U card promoters must not assume that “as long as I don’t directly use the U card myself, merely promoting or assisting with card applications cannot constitute a crime.”
On a lesser level, certain U card issuers do not intend to serve mainland Chinese residents. If promoters collect personal information from mainland users and assist them with supplementary documentation (e.g., visa materials) to open cards, they may violate laws in overseas jurisdictions regarding fraudulent acquisition of credit instruments. Additionally, once a promoter begins collecting personal data from mainland residents for card applications, they inevitably take on responsibilities related to personal information protection. If a significant volume of data is leaked, the promoter may face criminal liability.
On a more serious level, when U card promoters assist users in opening accounts, they effectively assume the issuer’s due diligence obligations. For example, if an applicant uses fake identification and the promoter helps complete the application, and the card is later used for money laundering, Chinese judicial practice typically presumes that the assistant was aware of the criminal intent. Similarly, if a mainland resident seeks to open multiple cards at once—an action suggesting attempts to circumvent foreign exchange limits or engage in abnormal usage—and the promoter assists in the process, they may become implicated in related criminal activities.
Summary
Stablecoin debit cards like U cards, as convenient tools for cryptocurrency payments, are likely to become part of everyday life in the future. However, at present, promoters must exercise caution in choosing legitimate issuers and fully understand relevant legal and compliance requirements as a baseline practice.
At this time, Manqin Law strongly advises against promoting U cards to users in mainland China due to significant policy risks. Even if China's cryptocurrency laws and regulatory framework become more relaxed and flexible in the future, promoters of stablecoin debit cards should still refrain from participating in card application assistance, avoiding the assumption of due diligence responsibilities that rightfully belong to the issuing institutions.
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