Without the support of exchanges and card issuers, U Card will inevitably suffer from a short life cycle
The current payment track is in an intermediate stage before qualitative change. Compared with the early stage, the existing products have been significantly improved in design details, usability experience and compliance path, but there is still a long way to go before a complete and sustainable Web3 payment framework can be built. Even so, this unformed state has become one of the focuses of market discussion in the past few months.
U Card, as the latest form of the current crypto payment narrative, is essentially an intermediate transition mechanism - it is neither a simple copy of the traditional Web2 recharge card, nor the final form of a new generation of on-chain wallets or payment channels, but rather a product of the current compromise between on-chain payment scenarios and off-chain consumption needs.
In practice, U Card realizes a composite model between Web2 familiar experience and Web3 asset logic by binding the on-chain account and the stablecoin balance, and supplemented by a compliant and friendly off-chain consumption interface. The reason why this model has gained rapid attention in the past six months is that, on the one hand, users imagination of on-chain assets can be used for daily consumption has never faded; on the other hand, it also shows that stablecoins are trying to move from traditional strong scenarios such as cross-border exchange and OTC settlement to further penetrate into C-end retail and local payment systems.
U Card is the product implementation point of this trend.
U Card attracted a lot of market attention after it made it possible to spend crypto assets. Bybit, Infini, Bitget and others launched related services one after another, which once made people think that cryptocurrency payment will soon become popular. However, the reality is that most projects shrink their business after a short period of operation, especially those without exchange background or support from first-tier card issuers, which are basically unsustainable.
The operating model of U Card is essentially highly dependent on the approval of the traditional financial system, and it is barely able to survive between compliance pressure and meager profits, making it difficult to sustain in the long run.
Strictly speaking, U Card is not a business model that can generate stable profits. It is just a form of service that relies on external permission.
The project party needs to rely on multiple layers of financial intermediaries such as card organizations and issuing banks to complete the settlement, and it itself is only the executor at the end of the chain.
The bigger challenge is that the operating cost of U Card is extremely high, which is essentially a loss-making business. The project side does not have a stable fee income like the exchange, nor can it have the right to speak like the first-tier card issuers, but has to bear the service pressure of users.
The key to the problem is that if the project party always stays in the role of intermediary of intermediaries, it can only operate passively at the bottom of the license ecosystem. To change this situation, there are two ways out: if you cant beat it, join the account system, connect the crypto industry as the ecological system of the account system, have a say in the compliance mechanism, and develop as part of the clearing system; or set up your own business, wait for the further improvement of the US stablecoin bill, bypass the current cumbersome and inefficient clearing system, and embrace the new outlet brought by the US dollar stablecoin when the status of the US dollar declines.
For wallets and exchanges, U-card is more of an auxiliary function to enhance user stickiness rather than a main source of profit. For exchanges like Bybit, even if the U-card business is not profitable, it can be exchanged for user growth and asset management scale improvement. But for Web3 startup teams that lack traffic entry and financial infrastructure experience, trying to burn out a sustainable U-card project through subsidies and scale is tantamount to trapping a beast in a cage.
Is the next step for crypto payments an underground bank or a new bank on the chain?
Now we can make a preliminary conclusion: what troubles crypto payment is the settlement system of traditional finance. But what is crypto payment? There are many opinions in the market. Is it a complete imitation of the scan to pay of daily life habits, or a new way to find new meaning in anonymous networks? For the latter, the meaning of payment is not transfer, but precipitation; therefore, under this semantics, the essence of payment is not liquidation, but circulation, which is an industry that has grown wildly in the dark forest with the development of blockchain.
Take the Chaoshan people and the Indian and Pakistani underground banks as examples. They have built a digital ecosystem based on relationships, trust and asset circulation. However, even if you want to become a Chaoshan person, the habits of Shandong people make it difficult for you to fully adapt.
What is a Chaoshan-style digital bank? Its essence is trust. The circulation of funds relies on trust, the asset precipitation and circulation brought about by delayed settlement relies on trust, the trust generated by knowing each other well, and the trust formed by the risk of social death caused by a betrayal . Chaoshan-style digital banks require introductions from acquaintances to join, eliminating the possibility of strangers using them. There is an invisible joint responsibility mechanism between everyone: you not only need to ensure that the person you introduce will not betray, but also that the next person of the introducer will not betray, otherwise a failure will uproot the entire line.
Under such a mechanism, payment is no longer a one-to-one relationship, but a one-to-many-to-one form that circulates continuously in such a value network.
Once the funds flow in, they are in the game, not only for payment, but also for gaining trust. When non-payment funds flow in continuously, the funds will form a deposit. When there are more and more Chaoshan people in the bank, it will become a social payment network with slow settlement but high frequency. The continuous circulation and endless flow of value will bring rich returns.
In fact, the closed ecological structure of digital bank has been running on the chain for many years. It has indeed solved the problem of gray circulation of some funds, but it has never been able to push encrypted payment from the niche market to mainstream application. On the contrary, what really has global potential and is gradually approaching the user end is the on-chain settlement system built on a compliant network with the US dollar stablecoin as the core.
Let’s go back to the fact that the underground bank-style on-chain structure has actually existed for a long time. Whether it is the gray market arbitrage organizations in Southeast Asia or the international settlements conducted by the Russian military through USDT, digital assets have already had mature means to bypass the traditional financial system and achieve the free flow of capital.
In particular, the rise of the Tron network is a reflection of this logic. According to reports from on-chain security companies such as TRM Labs and ChainArgos, between 2023 and 2024, more than 40% of illegal on-chain capital flows occurred on the Tron network, of which more than half were completed through USDT.
These funds did not enter the exchange, but completed the mirror release operation similar to that of underground banks through OTC hedging, wallet island hopping, DEX diversion and other forms. This mode of operation is highly similar to the overseas capital network built by Chaoshan people: it does not pursue the finality of the settlement layer, but relies on the distributed trust chain and cross-border network system to ensure liquidity. But the problem is that such an on-chain digital bank has been running for five years, why havent we seen its outbreak in encrypted payments yet? Does it need to continue to develop, or is its excitement irrelevant to you and me?
The fundamental reason is that this type of model is not designed for ordinary users. It does not solve the problem of how to get more people to pay with cryptocurrency but how to get a few people to complete untraceable payments with cryptocurrency.
Its starting point is to bypass rather than connect; it serves scenarios that do not want to be covered by regulation rather than user groups that require legal protection.
The Chaoshan financial network can build an efficient family transfer system between Thailand, the Philippines, and Hong Kong, but this does not mean that this structure can be transformed into a globally scalable infrastructure. It is like an efficient local area network, which is very flexible in marginal areas, but difficult to connect with the existing clearing system in the global market.
From a systemic perspective, capital is reluctant to leave can indeed increase the TVL of the platform and improve the capital utilization rate of the DeFi ecosystem, but from the perspective of the payment system, a truly scalable system requires funds to be able to flow in and out freely, rather than coming in but not going out.
The TON red envelope system and various on-chain point accounts are all doing one thing: converting the entry behavior of payment into precipitation. It is similar to the Yuebao logic of the Web2 era. This precipitation model does have commercial value, but it cannot break the ecological barriers. Users cannot freely use the assets in the TON wallet for cross-border payments, merchant payments, POS machine collection, and cannot obtain a stable mapping with the real-world account system. Chaoshan people may not need mapping, but you cant do the same thing with the Chaoshan dialect in the United States.
In other words, this “backyard circulation” model is not an infrastructure, but an ecological self-strengthening mechanism. While it is important to strengthen the use of funds in a closed system, it does not constitute the basic logic of “payment” as a global service.
What really drives Web3 payments from the dark web to the main web is the support for stablecoin payment networks at the U.S. policy level. After the U.S. Treasury Department officially promoted the GENIUS Act in 2024 and Congress passed the Clarity for Payment Stablecoins Act, stablecoins were given the policy positioning of strategic payment infrastructure for the first time.
Fintech companies such as Circle, Paxos, Stripe, Visa, and Mastercard are rapidly promoting the expansion of the application of USD stablecoins in international settlement, merchant acquisition, and platform settlement. Data released by Visa in early 2024 showed that more than 30 global payment institutions are integrating USDC as a cross-border settlement asset; and the issuance and use scenarios of USDC and PYUSD are also beginning to penetrate into the retail end.
These are not the circulation and sedimentation in the virtual economy, but the flow of funds between real goods and services, and are settlement behaviors with legal protection and audit compliance. In contrast, the token payment in the TON ecosystem and the scan code to pay function of some wallets are still local functions in a closed system, rather than global payment standards, before they are truly entered into corporate financial reporting systems, multinational e-commerce platforms, and credit networks.
We cannot deny that the mechanism design of digital banks is inspiring. Proposals such as intent and account abstraction are indeed upgrading traditional on-chain payments from machine-to-machine transfers to human intention-driven fund coordination. This has a certain philosophical resonance with the application of the relationship-strong trust mechanism by traditional underground banks. However, a systematic payment structure cannot be built only on vague social trust and local circulation logic. It must eventually be connected to supervision, and the user identity, transaction process, and source of funds can be traced.
At the same time, we must also look at the development direction of encrypted payments from a more macro perspective: as the global currency status of the US dollar faces structural challenges, the US fiscal and monetary system is trying to build a new dual-track monetary system of US dollar + US dollar stablecoin. Whether it is to hedge the expansion of RMB settlement, respond to the trend of emerging markets using euro/gold settlement, or stabilize its own financial influence in the Middle East, Southeast Asia and other regions, stablecoins are no longer marginal financial innovations, but strategic tools actively deployed by the United States in international financial competition.
This is why in the past two years we have seen that the promotion of US dollar stablecoins is accelerating across the board, from congressional legislation to the guidance of the Ministry of Finance, from the participation of traditional banks to the embedding in payment networks, and is being deeply integrated into sovereign currencies and sovereign regulatory frameworks.
So the question is: Can the digital money house payment model support such a strategic system? Obviously not. The essence of the underground money house model is to evade regulation, while the United States wants to build a global financial network with embedded regulation; digital money houses rely on community trust and gray space arbitrage, while the US dollar stablecoin system must be built on compliant financial institutions and regulatory licensing chains.
It is hard to imagine that the U.S. Treasury will hand over a key payment infrastructure to a funding network that relies on non-KYC wallets, anonymous bridges, and OTC transactions. Digital banks can solve circulation problems in marginal areas, but they cannot form a sovereign state-level monetary governance structure. Stablecoins are being given this role.
In other words, the future of the crypto industry will not be one of symbiosis with the gray industry. It played a supporting role in the dark side when the crypto industry has not yet grown up, but the approval of the Bitcoin ETF has allowed the crypto industry to enter a new cycle, which is a future of full integration and mutual nesting with traditional finance.
Whether it is JPMorgan Chase launching JPM Coin, BlackRock deploying BUIDL Fund, Visa integrating USDC, Stripe accessing on-chain payment, or Circle conducting policy docking with central banks in many countries around the world, these initiatives all show that traditional finance is accelerating into the on-chain world, and their standards are clear - compliance, transparency, and regulatory. This set of standards naturally excludes the expansion of underground money houses logic, and therefore constitutes the fundamental limitation of the digital money house model as the main path for encrypted payment.
The real future of Web3 payment is a network built on the basis of US dollar stablecoins and compliant settlement channels. It can not only undertake the openness of decentralization, but also make use of the credit foundation of the existing legal currency system. It allows funds to flow in and out freely, but does not blindly believe in sedimentation; it emphasizes identity abstraction, but does not evade supervision; it integrates user intentions, but does not deviate from legal boundaries. In this system, funds can not only enter the Web3 world, but also leave freely; it not only serves financial activities on the service chain, but is also embedded in the global exchange of goods and services.
Digital banks are like water, which is invisible and moves with the flow. A drop of rain falling into it becomes the sea. The next stage of encrypted payment should be more like light, which can merge with each other but has its own origin. Tracing back to the source, it can clearly find the way back. It does not pursue devouring, but focuses on illuminating.
About Movemaker
Movemaker is the first official community organization authorized by the Aptos Foundation and jointly initiated by Ankaa and BlockBooster, focusing on promoting the construction and development of the Aptos Chinese ecosystem. As the official representative of Aptos in the Chinese region, Movemaker is committed to building a diverse, open and prosperous Aptos ecosystem by connecting developers, users, capital and many ecological partners.
Disclaimer:
This article/blog is for informational purposes only and represents the personal opinions of the author and does not necessarily represent the position of Movemaker. This article is not intended to provide: (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets, including stablecoins and NFTs, is extremely risky and may fluctuate in price and become worthless. You should carefully consider whether trading or holding digital assets is appropriate for you based on your financial situation. If you have questions about your specific situation, please consult your legal, tax or investment advisor. The information provided in this article (including market data and statistical information, if any) is for general information only. Reasonable care has been taken in the preparation of these data and charts, but no responsibility is assumed for any factual errors or omissions expressed therein.
