Chinese users turn to ‘U cards’ to get around crypto rules: Asia Express

Viral U cards drive stealth stablecoin adoption in China

Stablecoins are finding an indirect path into China via payment cards going viral on social media.

Locally referred to as “U cards,” overseas Visa or Mastercards linked to stablecoin balances such as USDT, have surged in popularity on Chinese social platform Xiaohongshu, AKA Little Red Book. Posts explain how to obtain the cards with ease and use them for everyday overseas payments, such as subscriptions to services.

Such cards allow users to spend dollar-denominated stablecoins while merchants receive fiat currency, meaning Chinese businesses never directly touch crypto. Conversion is handled by overseas banks or licensed payment institutions, placing the transaction outside China’s domestic financial rails.

The trend recently drew attention from Caixin, one of China’s most influential finance outlets, which examined the rise of U cards and the legal questions surrounding their use.

According to the report, many users initially approach U cards as a workaround for cross-border payments rather than as a crypto product. Social media tutorials often focus on opening a foreign bank card and linking it to Apple Pay or Visa networks, with little emphasis on digital assets themselves.

Direct cryptocurrency payments are banned in China, alongside key crypto activities such as trading and mining.

Liu Honglin, founder of Shanghai Mankun Law Firm, said on X that users making consumer payments face relatively limited exposure to crypto, as asset conversion occurs offshore and settlement stays within conventional card networks.

In July, US President Donald Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act into law, accelerating global interest in regulated stablecoin issuance. Hong Kong followed with its own stablecoin rule, which has been enforced since August.

Pundits argued that the growing momentum behind stablecoins could pressure China to revisit its crypto ban. However, PBOC Governor Pan Gongsheng dismissed such speculation in October, saying there would be no change to existing policy.

Digital yuan shifts from cash-like design to digital deposits

China’s central bank digital currency (CBDC), or the digital yuan, will be recast as digital deposits through a new framework set to take effect from New Year’s Day, abandoning its digital cash model.

The shift was laid out by Lu Lei, vice governor of the People’s Bank of China (PBOC), who authored an article published on Dec. 29 in Financial News, a central bank-affiliated newspaper.

Lu argued that digital cash posed structural risks to the banking system as cash circulates outside the deposit system. Expanding digital cash could accelerate financial disintermediation.

Earlier experiments treated the digital yuan as a cash-like instrument held in user wallets. Under the new approach, digital yuan balances held at commercial banks will be treated as bank liabilities. Banks will be permitted to pay interest on digital yuan wallet balances.

The digital yuan is one of the most advanced CBDCs among major economies. By the end of November, it had processed about 16.7 trillion yuan ($2.37 trillion) in transactions across almost 250 million personal and corporate wallets, according to the PBOC’s figures. 

Lu framed the digital yuan’s shift as a response to emerging currencies outside the traditional financial system, including cryptocurrencies and stablecoins. He rejected the idea that blockchain-only systems represent true digital currency.

How South Korea’s financial giants are maneuvering into crypto exchanges

South Korea’s largest financial groups are moving closer to the country’s licensed cryptocurrency exchanges ahead of industry regulations expected next year.

Mirae Asset Group has reportedly moved to acquire a controlling stake in Korbit — the country’s fourth-largest exchange by trading volume — through its non-financial affiliate Mirae Asset Consulting.

South Korea enforces a strict separation between finance and industry by limiting regulated financial institutions from owning non-financial businesses. Even licensed crypto exchanges are still classified as non-financial entities. If Mirae Asset…