What is a U Card?

As regulations tighten, an old concept—the U Card—has started to attract attention again. So, what exactly is a U Card?
As the name implies, a U Card is a USDT bank card. You can deposit USDT or other stablecoins onto it, and it supports daily spending, ATM withdrawals, and cross-border payments. It will automatically convert USDT or other stablecoins into fiat currency (such as RMB, USD, etc.).
A U Card is similar to a traditional bank card, but it is not a credit card. You need to deposit cryptocurrency first before you can spend. Its core function is to bridge the crypto world and real-world payment systems, somewhat like an alternative form of C2C (and a more "compliant" C2C at that). U Cards are generally issued through collaborations between overseas banks and blockchain institutions, and by payment companies (like Paytend, later acquired by ALC) or institutions working with major international payment networks such as Visa, MasterCard, and UnionPay.
There are many types of U Cards, and they differ between service providers. Most are virtual cards, but there are also physical cards. Common U Cards support linking to Google Pay, Apple Pay, Alipay, etc., and can also be used directly as credit cards for purchases. Some providers support cash withdrawals.
U Cards sound great, and many people may think they are far superior to C2C. But don’t get too excited just yet; first, there are very few U Card providers that service mainland China. Also, this is part of the PayFi sector, and many CS project teams issue such cards, so you have to choose a reliable provider that also supports mainland Chinese users. The threshold is quite high. Additionally, there are payment limits on U Cards.
Here are some general risks and precautions:
In mainland China, let me add: if you’re thinking of doing anything illegal, don’t bother—if you load illicit funds onto a U Card, they can freeze your account!
Regulatory Risk
Cryptocurrency trading is considered illegal financial activity in China. Using a U Card may violate foreign exchange controls (such as excessive funds leaving the country) or be considered money laundering/illegal business operations. The central bank's "9.24 Notice" in 2021 banned related exchange services.
Tax Risk
Depositing or spending may trigger tax reporting obligations, and non-compliance could result in fines.
Security Risk
When choosing an issuer, prioritize security and avoid frequent high-value transactions. Some U Cards do not support all ATMs, and fees can be high (depending on the issuer).
The U Card itself is not illegal, but circumventing foreign exchange controls or using it for illegal purposes (like pyramid schemes) may constitute a crime.