U Card Project: The Best Starting Point from Zero to One

In recent years, the U Card project has quietly emerged in the cryptocurrency field. This product allows users to deposit stablecoins such as USDT or USDC, and then use them in daily life through a physical card or a virtual card, such as swiping at POS machines, binding to mobile payment applications, or withdrawing cash from ATMs. For entrepreneurs aspiring to launch U Card projects, choosing the right starting point is crucial.

After in-depth analysis, Hong Kong is considered an ideal place to launch the U Card project. This is not because its regulations are the most lenient, but because Hong Kong has a complete operational environment and a clear regulatory framework.

Advantages of Hong Kong

1. Clear regulatory boundaries: Currency exchange operations require an MSO license, stored value services are managed under SVF, while stablecoin custody currently does not require an additional license.

2. Convenient management of crypto assets: Crypto assets can be managed through professional custody service providers without the need to apply for additional licenses.

3. Abundant cooperation resources: There are numerous BIN partners, MSO service providers, KYC providers, and payment clearing networks locally.

4. Flexible operating space: Through clever structural design, the project can gain development opportunities within compliance boundaries.

Core Partners of the U Card Project

A compliant and feasible U-card project requires the following five types of core partners:

1. Issuing Institution (BIN Sponsor)
2. Payment Processor
3. Custodian of Crypto Assets
4. Fiat Settlement Party
5. KYC/AML Service Provider

Relevant Licenses and Regulatory Status

The U Card project mainly involves two types of licenses:

1. Currency Service Operator (MSO) License
2. Stored Value Facility (SVF) License

Currently, most U-card projects choose not to apply for an SVF license, but instead emphasize the nature of their products as "non-stored value tools" and only use an MSO license to legalize the funds exchange function. The reasons for this practice include:

• The cost of applying for an SVF license is high, and the requirements are strict.
• The current U-card project is relatively small in scale and has not yet attracted significant regulatory attention.
• The project design is clever, avoiding the formation of platform balances through instant settlement.

However, as the user base expands, it may face stricter regulatory scrutiny in the future.

The Importance of MSO License

Although certain business models may not legally require an MSO license, in practice, the MSO license is almost indispensable:

• Banks require an MSO license to provide deposit accounts.
• Clearing agencies require an MSO license to accept fiat currency business.
• Investors regard the MSO license as an important indicator of project compliance.

In addition, Hong Kong's upcoming "VA MSO" system will clearly include virtual asset exchange business within the scope of regulation.

U Card Fund Circulation Mechanism

In the U Card project, the exchange of stablecoins for fiat currency is usually not done directly by large exchanges or custodians, but rather through local OTC service providers. The typical process is as follows:

1. Users deposit stablecoins into the platform's custody wallet.
2. The project party or the clearing house transfers the assets to the local OTC.
3. OTC will deposit the equivalent fiat currency into the project's MSO or payment settlement account.
4. The fiat currency ultimately flows to merchants for card consumption or ATM withdrawals.

This model has advantages such as flexibility, speed, and avoidance of exchange scrutiny.

Other Optional Regions

Aside from Hong Kong, places like Singapore, Dubai, and Lithuania are also potential options for the U Card project, but each has its own pros and cons. Considering all factors, Hong Kong remains the most ideal starting point, as it can balance regulatory requirements with operational flexibility.

Conclusion

The U Card project represents the integration of crypto assets with traditional payment systems. For entrepreneurs, the key is to find a balance between compliance and innovation. Through clear structural design and robust operational pathways, the U Card project is expected to achieve rapid development on a compliant basis, pushing crypto payments towards a more mainstream direction.