Written by: @BlazingKevin_, the Researcher at Movemaker
U Card will inevitably face short life cycle if it is not supported by exchanges and card issuers
The current payment track is in an intermediate form stage before a qualitative change. Compared to the early stage, existing products have been significantly improved in design details, usability experience, and compliance path, but there is still a considerable distance from truly building a complete and sustainable Web3 payment framework. Even so, this "not yet formed" state has become one of the focuses of market heat discussion in the past few months.
U Card, as the latest form of the current encrypted 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 the new generation of on-chain wallets or payment channels, but a product of mutual compromise between on-chain payment scenarios and off-chain consumption needs at the current stage.
In specific practice, the U Card realizes a composite model between "Web2 familiar experience" and "Web3 asset logic" by binding the on-chain account with the stablecoin balance, and supplemented by a compliant and friendly off-chain consumption interface. The reason why this model has rapidly gained 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 further penetrate into the C-end retail and local payment systems from traditional strong scenarios such as cross-border remittance and OTC settlement.
U Card is the productization landing point in this trend.
U Card has attracted a lot of market attention after opening up the way to "spend crypto assets". Bybit, Infini, Bitget and others have successively launched related services, which once made people think that "cryptocurrency payment is about to become popular". However, the reality is that most projects have shrunk their businesses after a short period of operation, especially those without exchange backgrounds or first-level card issuer support, which are basically unsustainable.
The operating model of U Card is essentially highly dependent on the permission of the traditional financial system, and it is difficult to maintain in the long term between compliance pressure and meager profits.
Strictly speaking, "U Card" is not a business model that can generate stable profits, it is just one form of service that relies on external licenses.
The project party needs to rely on card organizations, issuing banks and other multi-level financial intermediaries to complete clearing, and it 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 losing business. The project party does not have stable handling fee income like an exchange, and cannot grasp the right to speak like a first-level card issuer, but has to bear the service pressure of users.
The key is that if the project party always stays in the role of "intermediary of the intermediary", it can only operate passively at the bottom of the license ecology. To change this situation, there are two ways: if you can't beat it, join it, join the account system, connect the crypto industry as the ecological part of the account system, have the right to speak on the compliance mechanism, and develop as part of the clearing system; or establish your own business and wait for the further improvement of the US stablecoin bill, bypass the current cumbersome and inefficient clearing system, and embrace the new opportunities brought by the US dollar stablecoin when the US dollar status 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 start-up teams that lack traffic entrance and financial infrastructure experience, trying to burn out a sustainable U Card project with subsidies and scale is no different from a trapped beast.
Is the next step of encrypted payment underground banks or on-chain "new" banks?
Now we can determine a preliminary conclusion: what plagues encrypted payment is the settlement system of traditional finance. But what is encrypted payment? There are many views on the market, is it a scan to pay that completely imitates daily life habits, or is it another way to find new meanings in the anonymous network? For the latter, the meaning of payment is not transfer, but sedimentation; therefore, in this semantics, the essence of payment is not clearing, but circulation, which is an industry that grows wildly in the dark forest along with the development of blockchain.
Taking the Chaoshan and Indian-Pakistani underground banks as examples, they built a digital ecosystem based on relationships, trust, and asset circulation. However, even if you want to become a "Chaoshan person", the habits of a "Shandong person" prevent you from fully adapting.
What is a Chaoshan-style digital underground bank? Its essence is trust. The flow of funds depends on "trust", the asset sedimentation and circulation brought by delayed settlement depends on "trust", the "trust" generated by knowing each other well, and the "trust" formed by the risk of social death caused by one betrayal. Chaoshan-style digital underground banks require introductions from acquaintances to join, eliminating the possibility of use by strangers. There is an invisible joint liability mechanism between each person: you not only need to ensure that the people you introduce will not betray, but also need to ensure that the next person introduced by the introducer will not betray, otherwise one 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 is constantly flowing in such a value network.
Once funds flow in, it is an entry, not only for payment, but also to gain trust. When non-payment funds flow in continuously, the funds form sedimentation. When there are more and more "Chaoshan people" in the underground bank, it becomes a slow settlement but high-frequency social payment network. And the continuous circulation and endless value will bring rich returns.
In fact, the closed ecological structure of "digital underground banks" has been running on the chain for many years. It does solve the gray circulation problem of some funds, but it has never been able to push "encrypted payment" from a niche market to mainstream applications. On the contrary, what is truly globally potential and gradually approaching the user end is the on-chain settlement system with US dollar stablecoin as the core and relying on a compliant network.
Let's go back to a factual question first: the underground bank-style on-chain structure has long existed. Whether it is the gray production arbitrage organization in Southeast Asia or the international settlement of the Russian military through USDT, digital assets already have sufficiently mature means to bypass the traditional financial system and realize 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, about 40% of illegal on-chain fund transfers occurred on the Tron network, more than half of which were completed through USDT.
These funds did not enter the exchange, but completed a "mirror release" operation similar to that of an underground bank through OTC hedging, wallet "island hopping", and DEX diversion. This operating mode is highly similar to the overseas fund network built by Chaoshan people: it does not pursue the final certainty of the settlement layer, but relies on distributed trust chains and cross-border personal connections to ensure liquidity. But the problem is, this on-chain "digital underground bank" has been running for five years, why haven't we seen its explosion in encrypted payment so far? Does it need to continue to develop, or is its excitement irrelevant to you and me?
The root cause is that this type of model is not designed for ordinary users. It does not solve "how to let more people pay with cryptocurrency", but "how to let a few people complete untraceable payments".
Its starting point is to bypass, not to connect; it serves scenarios that are unwilling to be covered by supervision, not user groups that need legal protection.
The Chaoshan-style 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 extremely flexible in marginal areas, but it is difficult to connect with the existing clearing system in the global market.
From a systemic perspective, "funds are unwilling to leave" can indeed improve the platform's TVL 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 "enter and exit" freely, rather than "enter but not exit".
TON red envelope system, and various on-chain points accounts are doing one thing: transforming the entry behavior of payment into sedimentation. Similar to the "Yu'ebao-ization" logic of the Web2 era. This sedimentation model does have commercial value, but it cannot break the ecological barrier. 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 can't do the same thing in the United States with "Chaoshan dialect".
In other words, this "backyard loop" model is not an infrastructure, but an ecological self-strengthening mechanism. It is certainly important to strengthen fund usage scenarios in a closed system, but it does not constitute the basic logic of "payment" as a global service.
What truly promotes Web3 payment from the "dark web" to the "main network" is the US policy support for the stablecoin payment network. After the US Treasury Department formally promoted the GENIUS Act in 2024 and Congress passed the Clarity for Payment Stablecoins Act, stablecoins were given the policy position of "strategic payment infrastructure" for the first time.
Financial technology companies such as Circle, Paxos, Stripe, Visa, and Mastercard are rapidly promoting the application expansion of US dollar stablecoins in international settlement, merchant acquiring, 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 additional issuance and use scenarios of USDC and PYUSD have also begun 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, which are settlement behaviors with legal protection and audit compliance. In contrast, token payment in the TON ecosystem and the "scan to pay" function of some wallets still belong to local functions in a closed system rather than global payment standards before they truly enter the financial reporting system of enterprises, cross-border e-commerce platforms, and credit networks.
We cannot deny that the mechanism design of "digital underground banks" is enlightening. Proposals such as Intent and account abstraction are indeed upgrading traditional on-chain payment from "machine-to-machine" transfer behavior to "human intention-driven" fund coordination. This has a certain philosophical resonance with the application of "relationship strong trust" mechanism by traditional underground banks. However, a systematic payment structure cannot only be built on vague social trust and local circulation logic, it must eventually be connected to supervision and traceability of user identity, transaction process, and source of funds.
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 hedging the RMB's settlement expansion, responding to the trend of emerging markets using Euro/gold settlement, or stabilizing its own financial influence in the Middle East, Southeast Asia and other regions, stablecoins are no longer marginal financial innovations, but a strategic tool actively deployed by the United States in international financial competition.
This is also why we have seen in the past two years that the promotion of US dollar stablecoins is accelerating in all aspects, from congressional legislation to Treasury guidance, from traditional bank participation to payment network embedding, and is deeply integrated into sovereign currencies and sovereign regulatory frameworks.
So the question is: can a digital underground bank-style payment model carry such a strategic system? Obviously not. The essence of the underground bank model is to evade supervision, while what the United States wants to build is a regulatory embedded global financial network; the digital underground bank relies on community trust and arbitrage in the gray space, while the US dollar stablecoin system must be built on compliant financial institutions and regulatory licensed chains.
It is difficult for us to imagine that the US Treasury Department would hand over a key payment infrastructure to a fund network that relies on non-KYC wallets, anonymous bridging, and OTC transactions for a living. Digital underground banks can solve circulation problems in marginal areas, but cannot constitute a monetary governance structure at the level of a sovereign country. And stablecoins are being given this role.
In other words, the future of the crypto industry will not be a future that coexists with the gray industry. It played a supporting role in the dark side when the crypto industry had not grown up, but the passage of 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 funds, Visa integrating USDC, Stripe accessing on-chain payment, or Circle conducting policy docking with central banks in many countries around the world, these measures all show that traditional finance is accelerating into the on-chain world, and their standard is clear - compliance, transparency, and regulation. This standard naturally excludes the expansion of the underground bank logic, and therefore constitutes the fundamental limitation of the "digital underground bank" model as the main path of 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 borrow the credit cornerstone of the existing fiat currency system. It allows funds to enter and exit freely, but does not 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; not only serve on-chain financial activities, but also embed in the global exchange of goods and services.
Digital underground banks are like water, water is formless and moves with the trend. A drop of rain falls into it and becomes the sea; while the next stage of encrypted payment should be more like light, which can be integrated with each other, but has its own origin. Tracing back to the source, you can clearly find the way it came, not pursuing to swallow, but focusing 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-speaking ecosystem. As the official representative of Aptos in the Chinese-speaking 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 reference only and represents the author's personal views, not Movemaker's position. 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, the price fluctuates greatly, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. If you have questions about specific situations, please consult your legal, tax or investment advisor. The information provided in this article (including market data and statistics, if any) is for general reference only. Reasonable care has been taken in preparing these data and charts, but no responsibility is assumed for any factual errors or omissions expressed therein.
