introduction:
When buying and selling virtual currency, the most feared thing is receiving black money.
Once the card is frozen, friends who have experienced it all know how difficult it is to unfreeze it. Public police in various places generally have a negative impression of parties involved in the purchase and sale of virtual currencies. Even if the party whose card is frozen is innocent, when communicating with the public security agency to unfreeze the bank card, he will be required to "refund the victim's money involved in the case" as a prerequisite for unfreezing. Conditions, and even worse, they will be labeled as "crime of aid" and "crime of concealment"
So how can you avoid having your card frozen? This is a common concern among people in the cryptocurrency circle, especially those who are in the cryptocurrency circle.
Many people use the MasterCard U card. Can I use it? Will the card not be frozen if I use the U card to withdraw money?
So today I wrote a short article to talk about various U cards and the pros and cons of using U cards, to answer friends who have such questions.
What is a 01U card?
The usage of the U card can be simply summarized as sending virtual currency (including but not limited to USDT) from the wallet address to the on-chain address of the Mastercard card. Users can directly use the card to pay within China, or directly withdraw cash from the card into RMB at an ATM.
Cardholders can bind their cards to apps such as Alipay, Meituan, and Ele.me, and use the U card as a payment tool for domestic consumption without having to go through the OTC process of exchanging virtual currency for legal currency.
According to relevant policies in my country, virtual currencies such as Bitcoin are regarded as a specific virtual commodity and do not have the same legal status as currency. They cannot and should not be circulated and used as currency in the market in my country. However, using the international U card payment method seems to have magically achieved the function of making virtual currency equivalent to legal currency?
In fact, this is not the case. The virtual currency that users recharge into the U card will be settled as foreign currency by the card operator. When users use the U card for transactions in China, it is no different from other bank cards with international payment functions. Because there is an international settlement agreement, domestic merchants, Alipay and other platforms still collect legal currency.
U cards can be divided into physical cards and virtual cards. For example, "UnionPay U Card" and "MasterCard U Card" are physical U cards, and "dupay" is a virtual U card. The rates and usage conditions of each type of card are slightly different, see the figure below for details.
02Pros and cons of using U card
1. Avoid the risk of card freezing
We often say that although buying and selling virtual currencies is not prohibited in China, the risks are indeed quite high. At the very least, your credit card will be frozen, and at the worst, it may involve criminal offenses. If you sell U to someone, and the money they transfer to you is the proceeds of their or their upstream illegal crimes (such as money from pig-killing scams, or money laundering from online gambling, etc.), then the probability of your credit card being frozen is very high.
Therefore, the reasons for the card being frozen are: 1. You are using a domestic bank card; 2. You have received abnormal transactions (fiat currency), which triggered the bank's risk control system.
However, the U card itself is a foreign bank card, and the money received in the card is not legal currency but virtual currency. It has nothing to do with domestic banks, so it will certainly not be frozen.
Some people may ask: What if my MasterCard U card receives a black U? What are the risks? Will it be frozen?
2. What should I do if I receive a black U card?
With a U card, you don’t need to convert your U into legal tender through OTC, so there will be no problem of receiving stolen money. But whether the card will receive black U is indeed a problem that is difficult to completely avoid.
But you need to understand a concept, U itself will not be marked as black U, only the address will be black. If in a case, the perpetrator uses U to transfer funds, large exchanges such as Binance and OK will blacklist the addresses involved in the case. If you receive U transferred from an address blacklisted by the exchange, the account that receives U will be blocked by the exchange, and the coins in the account can only be deposited but not withdrawn.
If you use a U card to receive U without going through the exchange, the risk control mechanism of the exchange will not be triggered. Therefore, receiving a black U will not affect consumption and cash withdrawal. Unless the issuing institutions of these U cards have relevant KYT risk control measures (Know Your Transaction. KYT is a process used by financial institutions to monitor and track whether there is fraud or suspicious activities in financial transactions, which can help financial institutions identify the source and destination of each transaction, assess transaction risks, take corresponding measures, and report suspicious transactions to regulatory authorities), under this premise, there is indeed a risk of the card being frozen if you receive a black U.
According to online rumors, the People's Bank of China has asked MasterCard and other international U-card companies to provide a list of customers with abnormal withdrawals, but there seems to be no authoritative official news.
3. Can using U card transactions avoid criminal risks such as aiding and abetting crimes and concealing crimes?
The reason for the crime of helping others to commit crimes and concealing the truth is that the stolen money involved in the case was received in one's bank card. Therefore, many people think that if the money received in the card is U and it does not involve bank card payment, then there is no criminal risk. But this is not the case.
All types of U cards do not support transfers, they can only be used for consumption or withdrawals, so there is no transaction with others through the U card itself, and transfers in and out of the upstream and downstream, which greatly reduces the possibility of illegal transactions. However, some people still use U cards to do arbitrage business: after the two parties agree on the difference between U and legal currency, they use their own U cards to help others collect U, and the difference in cash withdrawal from the ATM is their own profit. If the U transferred in is obtained by fraud, the upstream will transfer the ¥ obtained by fraud to USDT → to your U card → cash it out for ¥. This whole chain is not a cover-up.
Moreover, taking the MasterCard U card as an example, the card opening fee is 300 U, the monthly management fee is 1 Euro, the U recharge fee is 1%, and the ATM cash withdrawal fee is 2%. With such high costs, there are still people willing to give you U and let you cash it out. Isn't it obvious that there is a problem? This transaction model also advocates that you are subjective and ignorant? How can a lawyer save you?
4. Legal risks of being identified as illegal foreign exchange trading
Regarding the legal risks of illegal business operations in buying and selling USDT, Lawyer Shao has previously written many articles to provide popular science → ("More and more U merchants may be convicted of illegal business operations", "OTC merchants are involved in criminal risks of illegal business operations", "When introducing others to buy and sell foreign exchange, beware of illegal business operations!", "Helping others exchange currency and being convicted of illegal business operations"), so I will not repeat them in this article.
In the transaction chain of USDT → remit to U card → cash out to ¥, if the upstream U is exchanged for foreign currency, there are two situations:
① Exchanging RMB for personal use without any business purpose is an administrative violation. If discovered by the foreign exchange administration, an administrative fine will be imposed.
② If the purpose is to make a profit from the price difference, the transactions are frequent and charge unspecified objects, and are identified by the judicial authorities as speculation or disguised foreign exchange transactions, they will be classified as illegal business operations.
5. U-Card Scam
There are still certain barriers to applying for a U card by yourself, so many newbies will go to agents, but there are also good and bad agents. If you are unlucky enough to encounter a scammer, it is difficult to protect your rights. For example, the U card given to you by the scammer is a second-hand card. In the process of guiding you to operate, the recharge link sent to you is actually an authorization. When you recharge a large amount of U to the card, you will find that the U in the card has been magically transferred away.
In conclusion:
So, back to the original question of this article: Can U cards be used? The answer is yes, but only for personal use, to convert the U in your hands into cash. It is more like a recharge card in a supermarket, which can be used immediately after depositing. If you want to use it for arbitrage or as a tool for currency exchange, the legal risks caused by this are still very high.
The problem is never the tool itself, but the people who use it.
There are also many problems in the domestic U card agency industry. For example, they advertise that once you have a U card, you will not be frozen when you issue a U card. For example, when describing the advantages of the U card, they list that this card is suitable for online gamblers, people who have been punished for card cuts, and public officials who speculate in cryptocurrencies, etc. Aren’t they waiting for the country to take action with such blatant publicity?
The life cycle of U card in my country will not be very long in the future. It is a very simple reason:
First of all, it increases the usage scenarios of virtual currency in our country, which is contrary to the negative attitude towards virtual currency in our country's long-standing relevant policies.
Secondly, the country has been cracking down on "two-card" crimes and carrying out "card cutting" operations for several years. Does this kind of U-card agent promotion intend to allow people who have been "punished by card cutting" to use this card?
So, this thing can be easily broken.
