In comments submitted to regulators, a major US banking trade group has proposed that stablecoin anti-money-laundering (AML) rules should not focus solely on issuance and redemption, but should also cover the secondary market — that is, wallet-to-wallet on-chain transfers, DEX swaps, and peer-to-peer movement outside exchanges. According to Decrypt’s report, these institutions argue that AML should “focus on higher-risk activity” while closing the regulatory gap in secondary markets. This position emerges against the backdrop of discussions on implementing details for US stablecoin legislation (the GENIUS Act track), aiming to hold stablecoins to the same level of AML constraints as traditional banks.
Editorial take: what this means for U card users
Bottom line first: this is a policy debate, not an immediately effective ban — cardholders don’t need to take any action right now. But the direction it points to is worth watching for anyone topping up a virtual card with USDT.
The core action of a U card is “on-chain USDT → issuer account → fiat card balance.” Today, compliance focus sits at both ends: KYC by the exchange/wallet you deposit from, and KYC by the issuer. Banks now want regulatory reach to extend into the on-chain movement in between — that is, which address your USDT came from, how many hops it took, and whether it ever touched a flagged mixing address.
The direct impact isn’t “card suspension,” but more granular deposit screening:
- Users who top up through an exchange-integrated card (like Bybit Card) are least affected, since funds are already within a licensed exchange’s system — the on-chain source has already been screened on the exchange side.
- For products relying on independent on-chain wallet deposits (like RedotPay, or the Asia Elite variant of MPCard), issuers may in the future apply more address risk scoring to deposits of “unclear origin.”
- Users who deposit USDT straight into a card right after swapping on a DEX, or after it’s passed through multiple wallet hops, are the classic “secondary market” scenario this round of regulation is aimed at.
Within 7 days: nothing changes. Within 30 days: some issuers may add a “source of funds” field to their KYC questionnaires. Within 90 days: address risk scoring tools (like Chainalysis/TRM) may become more widespread on the issuer deposit side. See the deposit-compliance section in our MPCard review for more.
Historical comparison: how is this different from past rounds of regulation
This isn’t the first time stablecoin regulation has been “ratcheted up.” Three points of comparison are worth noting:
- The 2023 USDC depeg: that was a market risk event, and the regulatory response centered on “reserve transparency,” targeting the issuer. This time it’s the opposite — issuance has largely been framed by the GENIUS Act, and the focus has shifted to the circulation layer.
- MiCAR taking effect in the EU in 2024: the EU brought stablecoins (EMT/ART) under licensed issuance, but likewise left the on-chain secondary market in something of a gray area. What US banks are now asking for is essentially patching the same gap that MiCAR didn’t fully close either.
- FinCEN’s past “Travel Rule”: this required VASPs to pass along originator information between each other. The banking industry’s current proposal can be understood as an attempt to more explicitly extend Travel-Rule-like logic to wallet-to-wallet stablecoin transfers.
The similarity: regulation has always tightened progressively upstream, following the flow of money. The difference: this is the first time transfers between non-custodial wallets have been explicitly named as a risk surface — and that is precisely the path U card on-chain top-ups depend on most.
Compliance boundaries: where the gray areas are now
Three tiers to distinguish:
- Clearly permitted: topping up through a licensed exchange or compliant issuer, using a KYC’d account. This covers how most U cards are normally used.
- Gray area: on-chain peer-to-peer transfers, or topping up a card directly after a DEX swap. This isn’t currently prohibited by law, but it’s exactly the area this proposal aims to bring under oversight.
- Clearly prohibited: funds that have passed through sanctioned addresses or mixers — this line can’t be crossed under either the old or new rules.
For the US, see our US compliance guide; if you use cards mainly in Asia-Pacific, our Hong Kong compliance guide and Singapore compliance guide also cover local treatment of secondary-market flows. It’s worth emphasizing: this is currently only at the industry-comment-submission stage, not yet an effective rule — AML details will depend on the final regulatory text.
Milestones worth watching next
- Whether FinCEN issues a draft guidance targeting stablecoin secondary markets — this is the key step for industry input to become actual rules. Watch FinCEN’s official announcements.
- The public comment period for GENIUS Act implementing rules — watch whether secondary market provisions get written into the implementing regulations.
- Changes to mainstream issuers’ KYC questionnaires — if your usual card suddenly adds a “source of funds/wallet explanation” question, that’s this trend reaching the product side.
- Coverage of on-chain risk scoring tools — how fast Chainalysis/TRM-type tools spread on the issuer deposit side is a leading indicator of actual tightening.
Editorial recommendations
- Users holding MPCard, Bybit Card, or similar cards who use them normally after passing KYC: no action needed. This round is an upstream regulatory debate and doesn’t affect the usability of your existing card.
- Users accustomed to receiving USDT via peer-to-peer on-chain transfers and then topping up directly: consider routing deposits through a licensed exchange as an intermediary step, to leave a clear record of origin — this is a low-cost precaution, not an admission of current non-compliance.
- Users planning to apply for a new independent on-chain wallet type U card: no need to pause, but prioritize issuers’ compliance disclosures when choosing a card. You can cross-reference our 5 U Cards Worth Using in 2026 and Lowest-Fee U Card Roundup, and add “clarity of deposit compliance” as a comparison dimension too.
In one line: what this news changes is the granularity of scrutiny on USDT movement, not your ability to spend with your card. Keeping funding sources traceable matters far more, practically, than worrying about whether your card will be suspended tomorrow.