The U Card business faces challenges, as compliance costs and revenues are difficult to balance.

Recently, a company providing cryptocurrency payment card services suddenly announced the suspension of its card business, sparking widespread discussion within the industry. The company stated that it would suspend the use and new applications for all types of cards, but core functions such as recharging and withdrawals would not be affected.

The company's co-founder explained that the decision to exit the card business aimed at individual users was mainly due to extremely high compliance costs, very thin profits, and a heavy operational burden. He pointed out that this business currently consumes 99% of the company's time and costs but contributes almost no revenue. In the future, the company will shift its focus to wealth management and asset management services.

Industry insiders analyze that the U-card business faces multiple challenges. Firstly, the compliance risk is enormous; an investigation triggered by an internal report could lead to hefty fines, potentially exceeding the cost of obtaining a license. Secondly, U-cards are susceptible to abuse by criminals, and the platform not only lacks a stable source of income but also directly bears risks on the user side, making long-term operation extremely difficult.

Moreover, it is more severe that card organizations and upstream banks often pass on all fines related to anti-money laundering and other aspects to the issuing entities. At best, they may deduct the entire deposit, and at worst, it could lead to the revocation of the license. Meanwhile, intermediary institutions are only responsible for collecting fees and do not bear these risks.

From the user's perspective, the actual usage cost of the U card far exceeds the surface 1-2% transaction fee. The hidden costs such as card issuance fees, exchange losses, and recharge friction add up, resulting in an industry average real rate of 3-5%. Compared to the fee advantages of traditional credit card giants under massive transaction volumes, the U card lacks competitiveness in small payment scenarios.

Nevertheless, the U Card track continues to attract significant investment. In March of this year, a U Card company successfully completed a $40 million Series A financing round, with investment from several well-known venture capital institutions. At the same time, a large cryptocurrency exchange also announced a partnership with American Express to launch a new cryptocurrency credit card, offering benefits such as Bitcoin cashback.

However, the complexity of the U Card business cannot be ignored. The birth of a U Card involves multiple roles, including card organizations, BIN providers, issuing institutions, card program managers, fiat-cryptocurrency exchanges, and card production and technology integration service providers. These roles need to collaborate closely to jointly support the operation and Compliance of the U Card business.

Legal experts remind that using the U Card requires attention to potential legal risks. In some countries with strict foreign exchange management, exceeding the limit for funds going abroad may violate foreign exchange management regulations. Additionally, since the legal status of cryptocurrencies is not yet clear in certain countries, using the U Card for transactions may be regarded as illegal. Users should fully understand the relevant legal regulations in their location before using the U Card.

It is worth noting that although U cards have a certain level of anonymity, they are not suitable for tax evasion. Most U cards still rely on international payment networks, which record detailed transaction data for each transaction. Tax authorities can track the flow of funds through these records. For cross-border transactions, tax authorities can also use methods such as foreign exchange monitoring systems and bank information exchanges to track the flow of funds.

Overall, although the U Card business has strong market demand, the challenges it faces should not be underestimated. Finding a balance between compliance requirements and profit models will be a key factor in determining whether this business can develop sustainably in the long term.