U Card and OTC (C2C) are fundamentally different. When you use a U Card, you are not actually using USDT or USDC, but rather fiat currency. Currently, there are roughly four types of U Cards:
- The oldest method: When you deposit money into a U Card, there is a process similar to a transfer that allows you to convert USDT into USD or other fiat currencies. This is essentially currency exchange, and this action is mostly facilitated by intermediaries who primarily earn from the spread.
In this case, using a U Card or withdrawing funds is essentially unrelated to USDT; it is basically a foreign exchange card, similar to a dollar card or a Hong Kong dollar card, which are the most common.
There was a period when certain card segments allowed users to deposit USDT or other cryptocurrencies. During consumption, there would be an automatic settlement, deducting the corresponding fiat currency. The withdrawal process was similar, reducing the transfer process compared to the first method, but the essence remains the same.
Now very rare, some cards directly hold USDT or USDC, allowing direct use as USD without a currency exchange process. The recipient also receives USDT, but these cards are almost all non-withdrawable and are nearly extinct.
This type of card is relatively new and has started to see more use cases. It operates similarly to a credit card, where you first deposit cryptocurrency, and then a credit limit is provided based on a collateralized loan model. Within this credit limit, you can spend and withdraw, but fundamentally, it is still a foreign exchange card.
Thus, it can be seen that the U Card itself is a process of currency exchange or OTC. When you use a U Card, you are essentially using foreign exchange for settlement. Since this is a function of the card itself, it is largely unrelated to the user.
OTC, on the other hand, is a more straightforward method of depositing and withdrawing funds, which is also a primary target of regulation in China.
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