Ctrip's overseas version has launched USDT payments. What compliance risks should digital nomads be aware of?

Authors: Deng Xiaoyu, Li Haojun

introduction

Recently, Trip.com, the overseas version of Ctrip, officially launched stablecoin payment functionality. Web3 digital nomads exclaimed, "Finally, we can turn our USDT into real travel and hotel bookings!"

I believe that mainland practitioners are far more excited about this "application implementation" than about using USDT cards. As a Ctrip member, Attorney Deng Xiaoyu is deeply pleased with this payment implementation, but feels it's necessary to remind digital nomads to pay attention to compliance during use, and to work together to support the growth of boldly innovative enterprises.

Why has Ctrip's overseas version's support for U Pay caused such a sensation? Besides the so-called "payment freedom," there's actually an extremely shrewd economic calculation behind it.

First, there's the "natural discount" created by exchange rate differences. In the OTC market for stablecoins, the exchange rate of USDT often fluctuates between "inverted" and "premium" rates compared to official bank foreign exchange rates. By obtaining cheap stablecoins through specific OTC channels and deducting the equivalent amount in US dollars, users can often book high-end flights and hotels at prices 5%-10% lower than the market price.

Secondly, it avoids the "transaction fees" and "limits" of cross-border payments. Traditional credit card cross-border spending not only faces currency conversion fees of 1.5%-3%, but is also subject to an annual foreign exchange limit of $50,000. Using stablecoins for payments not only achieves the "physical transfer" of assets abroad, but also bypasses the layers of compliance reviews of the banking system. For Web3 professionals or high-net-worth individuals with large amounts of USDT, this is not just consumption, but also a "metaphorical" way to achieve asset liquidity.

However, these so-called "arbitrage opportunities" and "payment advantages" are precisely a lucrative opportunity for fleet suppliers, and are bound to attract regulatory attention. Therefore, individual users must read this guide to avoid criminal risks in different scenarios before clicking "confirm payment."

Scenario 1: Purely Personal Consumption

If the USDT you hold is from a legitimate source (such as early mining or investment in a legitimate exchange), and you only use it to book a hotel or buy a ticket for your overseas travel, then it falls under the category of "consumption for personal use".

Although this behavior may seem harmless, from the perspective of China's foreign exchange regulations, its logical chain is "RMB - virtual currency - offshore foreign currency - flights and hotels". This essentially constitutes a "matching" of domestic and foreign funds, achieving a disguised exchange between RMB and foreign currency.

While small, occasional acts of personal use are generally not prosecuted as criminal offenses in judicial practice, they are still considered violations of foreign exchange controls at the administrative level. If the accumulated amount becomes substantial, the fines levied by the State Administration of Foreign Exchange could be far greater than your hotel bill.

Another real risk lies in the "toxicity" of the funding sources.

The core pain point of Web3 payments is that it's difficult to guarantee the USDT you hold is completely clean. If you buy USDT through OTC channels and the other party's funds are involved in illicit activities such as telecom fraud or gambling, the USDT you pay to the platform is "black USDT." Police will trace the USDT transactions, and once the payment is blocked, you won't be able to stay in a hotel; all your bank cards, WeChat accounts, and Alipay accounts may face a complete freeze.

In a criminal investigation, proving that "I really just wanted to book a room" is far more difficult and time-consuming than one might imagine.

Scenario 2: Making a profit by ordering on behalf of others

If you discover exchange rate differences or discounts when using stablecoins for payments, and use this as an opportunity to post on social media to book hotels or flights for others and collect RMB, the nature of your activity fundamentally changes. Once your behavior becomes repetitive and profit-driven, it is no longer consumption, but a "business activity."

According to the "Interpretations of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases of Illegally Engaging in Fund Payment and Settlement Business and Illegally Buying and Selling Foreign Exchange", engaging in illegal fund payment and settlement business or illegally buying and selling foreign exchange, with an illegal business amount of 5 million yuan or more or an illegal income of 100,000 yuan or more, constitutes the crime of illegal business operations.

You might think you're taking advantage of the platform, but from a regulatory perspective, you're essentially using cryptocurrency as a medium to illegally operate an underground bank. This kind of "professional money laundering" behavior directly falls under the line of criminal prosecution.

Furthermore, "price inversion" often implies "original sin." If you can provide USDT subscription services at prices far below market value, the judicial authorities will presume that you subjectively knew the USDT's source was illegitimate. In this case, every subscription fee you receive may be considered as helping black market activities "cash out."

At this point, you're facing more than just illegal business operations; you could also be suspected of concealing or covering up the proceeds of crime or aiding and abetting fraud. The cost of such criminal risks is far greater than the small commission you might receive for ordering.

How to be a "compliant traveler" in the Web3 wave?

Technological advancements bring convenience, but the "long arm" of the law always keeps a close eye on the security of cross-border capital flows. To ensure that Web3 players can enjoy the benefits of technology without ending up in trouble, lawyer Mankiw offers the following advice:

1. For players who consume for personal use, the principle of "de-financialization" must be adhered to.

The payment account name, Ctrip order name, and the actual check-in person's name must be highly consistent. Never try to save time by paying for a "friend," as this mismatch of identities is extremely difficult to explain in a legal investigation. At the same time, you must retain complete evidence of "cleanliness of funds."

If the stablecoin you paid for was purchased through a compliant exchange after real-name authentication, please be sure to save a screenshot of the transaction record from that year. This is a crucial safeguard against potential criminal charges should your bank card be frozen or you are involved in criminal inquiries.

In addition, the bank statement and boarding pass after checking into the hotel are also indispensable evidence, as they can prove that your payment behavior has a real consumption background, rather than an illegal foreign exchange settlement through fictitious transactions.

2. For those who want to profit from exchange rate differences, our advice is only one: stop immediately.

Publicly posting "U-order" advertisements on domestic social media platforms not only easily triggers the crime of illegal business operations, but also makes you a "money laundering front" for illicit funds. Never accept RMB from strangers to help them pay U-orders to the platform, because you never know how much blood and tears of victims are hidden behind that RMB.

Remember, cheap USD often comes with heavy criminal costs. Never attempt to launder black market USD into clean fiat currency through "refunds and cash-outs".

Overseas platforms such as Ctrip have very strong anti-money laundering systems. Once such behavior triggers an alarm, your Web3 assets and domestic bank cards will be blocked in both directions, and you may even be blacklisted by international anti-money laundering organizations.

Conclusion

The dream of Web3 digital nomads is beautiful: to book a flight to London from a poolside in Chiang Mai using your stablecoin, embarking on a spontaneous trip anytime, anywhere. Ctrip's overseas version's support for U Pay certainly brings us a significant step closer to this "payment freedom."

But as lawyers, we've seen far too many tragedies where families' bank accounts were frozen because of greed for a small exchange rate discount. The price of this "smooth" deal is often a late-night interrogation where you can't prove your innocence.

We do not recommend completely merging your Web3 assets with your real-life assets, and we strongly discourage you from risking serious criminal charges by "casually ordering" for a friend. Life should be lived as it is; keep your cryptocurrency in your wallet and keep compliance in your mind.

After all, all journeys must end with a safe return home for the ticket to truly be valid.

Don't let a "smooth" payment turn into a protracted criminal battle.