The next step for crypto payments: underground banks or on-chain "new" banks?
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The next step for crypto payments: underground banks or on-chain "new" banks?
As the U.S. dollar's global currency status faces structural challenges, the American fiscal and monetary system is attempting to build a new dual-track currency framework of "dollar + dollar stablecoin."
Navigating Web3 tides with focused insightsAuthor: @BlazingKevin_, Researcher at Movemaker
Without Exchange and Card Issuer Support, U Cards Face Short Lifecycle Challenges
The current payment landscape is in a transitional phase on the verge of qualitative change. Compared to earlier iterations, existing products have made significant improvements in design details, user experience, and compliance pathways. However, there remains a considerable gap before a complete, sustainable Web3 payment framework can be established. Ironically, this very "incompleteness" has become one of the focal points of market attention over the past few months.
U Cards, as the latest iteration in the crypto payment narrative, are essentially an “interim mechanism.” They are neither simple copies of traditional Web2 gift cards nor the final form of next-generation on-chain wallets or payment channels. Instead, they represent a compromise between on-chain payment scenarios and off-chain consumer demands in the current environment.
In practice, U Cards bind on-chain accounts with stablecoin balances and integrate compliant, user-friendly off-chain spending interfaces, creating a hybrid model that bridges the familiar Web2 user experience with Web3 asset logic. This model has gained rapid traction over the past half-year—driven both by enduring user imagination around using on-chain assets for daily spending, and by stablecoins’ strategic push beyond their traditional strongholds like cross-border remittances and OTC settlements into retail and local payment ecosystems.
U Cards are the productized manifestation of this trend.
After enabling users to "spend crypto," U Cards attracted significant market interest. Platforms like Bybit, Infini, and Bitget successively launched related services, briefly fueling speculation that cryptocurrency payments were about to go mainstream. Yet reality tells a different story: most projects scaled back operations shortly after launch, especially those without backing from exchanges or primary card issuers, which proved largely unsustainable.
The operational model of U Cards is fundamentally dependent on permissioned traditional financial infrastructure, barely surviving under regulatory pressure and razor-thin margins, making long-term viability difficult.
Strictly speaking, “U Cards” do not constitute a stable business model—they are merely a service layer reliant on external permissions.
Project teams must depend on multiple financial intermediaries such as card networks and issuing banks to complete settlement, positioning themselves only as executors at the end of the chain.
A greater challenge lies in the exorbitant operating costs—U Card operations are inherently loss-making. Unlike exchanges with steady fee revenues, or primary issuers who control negotiation power, project teams bear full customer service burdens without equivalent income streams.
The core issue is that as long as project teams remain mere “intermediaries of intermediaries,” they will operate passively at the bottom of the licensing ecosystem. To break free, two paths exist: either join the system by integrating into account infrastructures, connecting the crypto industry through formal account ecosystems, gaining influence within compliance frameworks, and becoming part of the clearing system; or forge an independent path—awaiting further refinement of U.S. stablecoin legislation, bypassing today’s cumbersome and inefficient clearing systems, and seizing new opportunities presented by dollar stability shifts while firmly embracing the rise of USD-pegged stablecoins.
For wallets and exchanges, U Cards serve more as tools to enhance user stickiness than primary revenue sources. For instance, even if Bybit's U Card service isn’t profitable, it drives user growth and increases Assets Under Management (AUM). But for Web3 startups lacking traffic channels or experience in financial infrastructure, attempting to burn capital and scale toward a sustainable U Card offering is akin to being trapped in a cage.
Is the Future of Crypto Payments the Underground Bank or an On-Chain 'New' Bank?
We can now draw a preliminary conclusion: what hinders crypto payments is the legacy financial settlement system. But what exactly *is* crypto payment? The market holds diverse views—should it fully mimic real-life habits like scan-to-pay, or should it take a different route, seeking new meanings within anonymous networks? For the latter, the significance of payment isn't just transfer—it's accumulation. Under this interpretation, the essence of payment isn't settlement, but circulation—an industry that has grown wildly in the dark forest of blockchain development.
Take the Chaoshan people or South Asian underground banking systems as examples—they’ve built digital ecosystems based on relationships, trust, and asset recycling. Yet even if you wish to become a “Chaoshan person,” your own cultural habits—say, those of a “Shandong person”—may prevent full adaptation.
What defines a Chaoshan-style digital money shop? Its foundation is trust—the flow of funds relies on “trust,” delayed settlements and asset recycling rely on “trust,” deep mutual knowledge generates “trust,” and the risk of social death from betrayal enforces “trust.” Joining a Chaoshan digital money shop requires personal introduction, eliminating strangers. An invisible collective accountability exists among members: you must ensure not only that your referral won’t betray, but also that their referrals won’t either—because one failure could uproot an entire lineage.
Under such mechanisms, payment ceases to be a one-to-one relationship and evolves into a dynamic one-to-many-to-one pattern within these value networks.
Once funds enter the system, participation begins—not merely for spending, but to gain trust. As non-payment capital flows in continuously, liquidity accumulates. As more “Chaoshan people” join, the system transforms into a slow-settling yet high-frequency social payment network. Continuous circulation generates substantial returns.
In fact, such closed “digital money shop” ecological structures have operated on-chain for years. While they effectively address certain gray-market fund circulation issues, they’ve failed to elevate “crypto payments” from niche use cases to mainstream adoption. Conversely, what truly shows global potential and is gradually reaching end-users is the on-chain settlement system centered on USD-pegged stablecoins and built upon compliant networks.
Let’s return to a factual observation: the on-chain structure resembling underground banking already exists. Whether it’s Southeast Asian gray-market arbitrage groups or Russian military units using USDT for international settlements, digital assets have long possessed mature capabilities to circumvent traditional finance and enable capital mobility.
The rise of the Tron network exemplifies this logic. According to reports from on-chain security firms like TRM Labs and ChainArgos, between 2023 and 2024, over 40% of illicit on-chain fund flows occurred on the Tron network, with more than half conducted via USDT.
These funds often bypass exchanges entirely, instead utilizing OTC hedging, wallet “island-hopping,” and DEX分流 (diversion) to achieve “mirroring release” operations analogous to underground banking. This operational model closely mirrors the overseas financial networks built by the Chaoshan community: it does not prioritize finality at the settlement layer, but instead depends on distributed trust chains and cross-border human networks to maintain liquidity. But here’s the question: after five years of operation, why haven’t we seen an explosion of such on-chain “digital money shops” in crypto payments? Is further evolution needed, or was their activity never meant to impact people like us?
The fundamental reason is that these models weren’t designed for ordinary users. They don’t aim to answer “how to get more people to pay with crypto,” but rather “how to let a few individuals make untraceable crypto payments.”
Their starting point is evasion, not integration. They serve scenarios that wish to avoid regulation, not users who require legal protection.
The Chaoshan financial network can build highly efficient “family-style transfer systems” across Thailand, the Philippines, and Hong Kong—but this doesn’t mean such structures can scale into globally deployable infrastructure. It functions like a high-efficiency local network, extremely resilient at the edges, yet unable to interface with existing global clearing systems.
From a systemic perspective, the idea that “capital is reluctant to leave” may boost TVL and improve DeFi capital efficiency, but from a payment system standpoint, a truly scalable system requires free movement *in and out*, not just “in with no way out.”
Systems like TON’s red packet feature and various on-chain points accounts all pursue the same goal: converting payment entry into capital retention—a mechanism similar to the “Yu’ebao-ification” logic of the Web2 era. While such retention models hold commercial value, they fail to break down ecosystem silos. Users cannot freely use assets from their TON wallets for cross-border payments, merchant transactions, or POS machine settlements, nor can they establish stable mappings with real-world account systems. A “Chaoshan person” might not need such mapping, but you can’t replicate the same thing in the U.S. using “Chaoshan dialect.”
In other words, this “backyard circulation” model isn’t infrastructure—it’s a mechanism for self-reinforcement within closed ecosystems. Strengthening capital usage scenarios within isolated systems is valuable, but it doesn’t constitute the foundational logic of “payment” as a global service.
What’s truly driving Web3 payments from the “dark net” to the “main net” is U.S. policy support for stablecoin payment networks. After the U.S. Treasury formally advanced the GENIUS Act in 2024 and Congress passed the Clarity for Payment Stablecoins Act, stablecoins received their first official designation as “strategic payment infrastructure.”
Fintech companies including Circle, Paxos, Stripe, Visa, and Mastercard rapidly expanded applications of USD-pegged stablecoins in international settlements, merchant acquiring, and platform clearing. Visa reported in early 2024 that over 30 global payment institutions were integrating USDC for cross-border settlements, while USDC and PYUSD issuance and usage began permeating into retail channels.
This isn’t virtual economic circulation or internal accumulation—it’s real capital flow between tangible goods and services, backed by legal protections and audit-compliant settlement processes. In contrast, token payments within the TON ecosystem or certain wallets’ “scan-to-pay” features remain localized functions within closed systems rather than global payment standards until they’re integrated into corporate financial reporting systems, cross-border e-commerce platforms, and credit networks.
We cannot deny that the design principles behind “digital money shops” are insightful. Concepts like Intent and Account Abstraction are evolving traditional on-chain payments from machine-to-machine transfers into human-intent-driven capital coordination. There’s a philosophical resonance here with how traditional underground banks leverage “relationship-based trust.” However, systematic payment architectures cannot be built solely on ambiguous social trust and localized circulation logic. Ultimately, they must connect to regulation—with traceability of user identities, transaction processes, and fund origins.
At the same time, we must adopt a broader perspective on the trajectory of crypto payments: as the U.S. dollar faces structural challenges to its global monetary dominance, the U.S. fiscal and monetary system is actively constructing a dual-track currency framework of “dollar + dollar-pegged stablecoins.” Whether countering RMB settlement expansion, responding to emerging markets adopting euro/gold settlements, or maintaining financial influence in regions like the Middle East and Southeast Asia, stablecoins are no longer marginal financial innovations—they are now strategic instruments deliberately deployed by the U.S. in global financial competition.
This explains why, over the past two years, we’ve witnessed accelerated momentum—from congressional legislation to Treasury guidance, from traditional bank participation to integration into payment networks—driving USD-pegged stablecoins toward deeper alignment with sovereign currencies and regulatory frameworks.
So the question arises: can a digital money shop–style payment model support such a strategic architecture? Clearly not. The essence of underground banking is regulatory evasion, whereas the U.S. aims to build a globally integrated financial network *with* embedded regulation. Digital money shops thrive on community trust and gray-space arbitrage, while the dollar stablecoin system must rest on compliant financial institutions and regulated permission chains.
It’s hard to imagine the U.S. Treasury entrusting a critical payment infrastructure to a network built on non-KYC wallets, anonymous bridges, and OTC trading. Digital money shops may solve circulation problems at the periphery, but they cannot form the basis of national-level monetary governance. That role is being assigned to stablecoins.
In other words, the future of the crypto industry will not be one coexisting with gray industries. While such sectors provided crucial support during the industry’s early, shadowy days, the approval of Bitcoin ETFs marks a new cycle—one defined by full integration and interlocking with traditional finance.
Whether it’s JPMorgan launching JPM Coin, BlackRock deploying its BUIDL fund, Visa integrating USDC, Stripe adopting on-chain payments, or Circle engaging in policy dialogues with central banks worldwide—all signal that traditional finance is rapidly entering the on-chain world, guided by clear standards: compliance, transparency, and regulatory oversight. These principles naturally reject the expansion of underground banking logic, thereby exposing the fundamental limitations of the “digital money shop” model as a primary path for crypto payments.
The true future of Web3 payments lies in a network built on USD-pegged stablecoins and compliant settlement channels. It combines the openness of decentralization with the credibility of existing fiat systems. It allows capital to move freely in and out, without fetishizing accumulation; emphasizes identity abstraction without evading regulation; integrates user intent without transcending legal boundaries. Within this system, capital can not only enter the Web3 world but also exit freely; it supports not just on-chain financial activities but also integrates deeply into global exchanges of goods and services.
Digital money shops are like water—formless, adapting to circumstances. A single raindrop merges into the ocean. But the next stage of crypto payments should be more like light—capable of merging with others, yet preserving its origin. Trace it backward, and you can always find the source. It doesn’t seek to consume, but to illuminate.
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