The Future of Encryption Payments: From Intermediary Forms to Regulatory Integration

The current payment sector is in a transitional phase before a qualitative change. Compared to earlier stages, existing products have made significant improvements in design, experience, and compliance, but there is still a distance to building a complete and sustainable Web3 payment framework. This "unformed" state has become one of the focal points of recent market discussions.

The U Card, as the latest form of encryption payment, is essentially a transitional mechanism. It is neither a simple copy of Web2 recharge cards nor the ultimate form of new generation on-chain wallets or payment channels, but rather a product of mutual compromise between on-chain payments and off-chain consumption needs.

The U Card integrates the Web2 experience with Web3 asset logic by binding on-chain accounts and stablecoin balances, along with compliant off-chain consumption interfaces. Its rapid attention stems, on one hand, from users' ongoing imagination about the daily consumption of on-chain assets, and on the other hand, reflects the expansion of stablecoins from traditional strong scenarios to C-end retail and local payments.

However, most U-card projects shrink their operations after a short period, especially those lacking exchange background or support from primary issuers, which find it difficult to survive. The U-card model heavily relies on the licensing of the traditional financial system, barely maintaining itself between compliance pressures and thin profits, making it difficult to sustain in the long term.

The U card is not a stable profit-making business model, but rather a service form that relies on external licenses. The project party needs to depend on multiple layers of financial intermediaries to complete the clearing, and itself is merely the executor at the end of the chain. The greater challenge lies in the extremely high operating costs, which are essentially a loss-making business.

For wallets and exchanges, the U Card is more of an auxiliary function to enhance user stickiness. However, for Web3 startup teams lacking traffic entry and experience in financial infrastructure, trying to burn subsidies and scale to create a sustainable U Card project is no different from a desperate struggle.

Underground Money House or On-Chain "New" Bank?

The traditional financial settlement system is what troubles encryption payments. There is a divergence in the market regarding the definition of encryption payments. Is it to imitate everyday life with QR code payments, or to seek new meanings in anonymous networks? The latter believes that the significance of payments lies not in transfer but in accumulation, and that the essence is not settlement but circulation.

Taking some underground money houses as an example, they have built a digital ecology based on relationships, trust, and asset circulation. The essence of this model is trust, and the asset accumulation brought about by the circulation of funds and delayed settlement relies on trust. In this mechanism, payments become a one-to-many-to-one form that continuously circulates in the value network.

In fact, this closed ecological structure has been operating on-chain for many years, solving part of the gray circulation of funds, but it has failed to push encryption payments into the mainstream. What truly has global potential and is gradually approaching the user end is an on-chain settlement system built around USD stablecoins and relying on compliant networks.

The rise of certain networks is a manifestation of this logic. According to reports from security companies, a large amount of illegal on-chain fund flow occurs in specific networks, mainly completed through stablecoins. These funds complete "mirror release" operations similar to underground money houses in various ways.

However, these types of models are not designed for the average user; they address the needs of a small number of people who want to make untraceable payments. Their starting point is to bypass rather than integrate, serving scenarios that do not wish to be covered by regulation.

From a systematic perspective, a truly scalable system requires free flow of funds in and out, rather than "can enter, but cannot exit". Various on-chain points accounts are converting payment entry behaviors into deposits, similar to the "Yu'ebao-style" logic of the Web2 era. This model has commercial value, but cannot break through ecological barriers.

What drives Web3 payments from the "dark web" to the "mainnet" is the support of the U.S. policy level for stablecoin payment networks. With the advancement of related bills, stablecoins have been assigned the policy position of "strategic payment infrastructure" for the first time. Multiple fintech companies are rapidly advancing the application expansion of U.S. dollar stablecoins in international settlement, merchant acquiring, and platform settlement.

The future of the encryption industry lies in a comprehensive integration and mutual embedding with traditional finance. Traditional finance is accelerating its entry into the on-chain world, where their standards are compliance, transparency, and regulatory oversight. This set of standards naturally rejects the expansion of underground money laundering logic.

The true future of Web3 payments lies in a network built on the foundation of USD stablecoins and compliant settlement channels. It can embrace the decentralized openness while leveraging the credit foundation of the existing fiat currency system. It allows for the free flow of funds, emphasizes identity abstraction without evading regulation, and integrates user intentions without straying from legal boundaries.