Recently, the USDT Card has been getting a lot of attention. More and more Web3 Participants are choosing to use the USDT Card for everyday spending, and even for large purchases. Naturally, taxes become an unavoidable topic when using the USDT Card. This AMA session was hosted by FinTax, co-organized by Wu Blockchain and moderated by Wu Blockchain’s Maodi. FinTax founder Calix, senior tax manager Simon, and tax analyst Ray joined the conversation to discuss: “Can the USDT Card be used for tax avoidance?”

1. It's Hard to Avoid Taxes with the USDT Card

Maodi: First, let’s hear from Calix, Simon, and Ray with their quick takes on the question “Can the USDT Card be used for tax avoidance?”

Simon: From a tax regulation perspective, the USDT Card does offer a certain level of anonymity, but it’s not enough to effectively avoid taxes. That’s because the USDT Card still relies on existing payment networks. Tax authorities can access personal fund flow data through foreign exchange monitoring systems, CRS, and compliance rules from payment platforms. This makes it possible to track account balances and fund movements.

Ray: You can think of the USDT Card as a kind of prepaid card. When you use it to pay, you’re not using Bitcoin like with the Lightning Network, but rather fiat currency. And using fiat means there’s a cash-out or conversion process between crypto and fiat, which is typically subject to strict identity verification (KYC). So it’s not really anonymous—and definitely not tax-free.

Maodi: Calix, some users believe that using the USDT/USDC Card means spending USDT or USDC directly, without touching a bank account. So does that mean they’re avoiding taxes? And if it doesn’t go through a bank, does that help them dodge tax authority monitoring?

Calix: Let me start with how mainland China’s tax authorities are currently enforcing rules. It’s true that many mainland residents are being asked to pay back taxes, mainly because their overseas bank accounts hold large balances—and Chinese tax authorities can access that kind of information. If the account is deemed high risk, they’ll investigate the source of funds and whether it counts as taxable income. As for the USDT Card, the key question is how the money got onto the card. Usually there’s an OTC conversion involved. Personally, I haven’t used a USDT Card that doesn’t require KYC. Most require identity verification before you can use them normally. That means you have a bank account, and the money in it comes from converting U. Even without discussing how it’s taxed, just having money in your bank account alone can raise tax concerns in most jurisdictions. And if your account falls under the CRS automatic exchange scope, tax authorities across countries can easily access that account data.

2. The USDT Card Mainly Involves Personal Income Tax

Maodi: So what kinds of taxes might be involved when spending with a USDT Card?

Calix: The most likely one is personal income tax. Whether or not it’s taxed depends on where the money came from—like salary, investment returns, or business income—not on the spending behavior itself. Also, consumption taxes like VAT or sales tax are usually baked into the product or service price, so users in Greater China generally don’t feel those taxes as obviously.

3. Even Small or Infrequent USDT Card Spending Carries Tax Risk

Maodi: Based on your real-world experience, are there any clear thresholds or ranges when using a USDT Card? Like, how much or how often would trigger scrutiny from tax authorities?

Calix: There's no strict benchmark yet, but Chinese tax residents holding large sums in overseas accounts are definitely on the radar. Since USDT Cards function like overseas bank accounts, holding large balances on them may also attract attention. Tax authorities will analyze and engage with the individuals involved, and if they discover taxable income, they’ll require back taxes to be paid. The key here is the CRS mechanism.

4. USDT Cards, Bank Accounts, and Tax Treatment

Maodi: You mentioned the USDT Card is essentially like a bank account, but in China there are restrictions on domestic bank accounts. For example, I recently tried to transfer a large amount out, but since my card was a Tier-2 card, I had to go to a bank branch. So with a USDT Card, can I bypass that? And does this have any tax implications?

Calix: USDT Cards are generally issued by overseas institutions, so they’re not directly subject to domestic banking rules. But in practice, there are still some indirect requirements, depending on the issuing and settlement institutions.

Maodi: Since the USDT Card is like a bank account, does that mean even if I just store U on it without spending, the tax authorities could still monitor the balance via CRS and tax me?

Simon: That depends on how the USDT Card settles transactions. Usually, there are two kinds of settlement: one where it’s converted into fiat at the time of top-up, and another where it’s converted only when the money is actually spent. In both cases, if the U has appreciated in value since you acquired it, that gain would be subject to income tax.

Calix: Right. If you top up U and don’t convert it into fiat—so there's no immediate settlement into a bank account—then CRS wouldn’t kick in. As Simon said, one method settles at the time of spending, and the other settles at the time of top-up. The CRS mechanism only applies when fiat appears in a bank account.

5. Advice for USDT Card Users

Maodi: Do you have any advice for USDT Card users? Like how to avoid storing too much on the card, or any habits they should keep?

Calix: In the long run, crypto taxation will come quickly, especially with the U.S. pushing forward. Overall, the trend is to measure assets in fiat terms and tax capital gains as personal income. The USDT Card is definitely within tax authorities’ radar. That’s the first thing. Secondly, you should ask whether the USDT Card is truly convenient for your life. If it is, then go ahead and use it, but be mindful of the tax cost and risk. For example, during China’s annual tax reconciliation, if the authorities ask you to declare income and you’re not prepared, you’ll be caught off guard. Also, funds in overseas accounts held by Chinese tax residents will increasingly be monitored. There aren’t many loopholes left in the tax laws, and even legitimate tax planning requires a case-by-case approach.

6. Using Others’ Info for KYC Still Has Tax Risk

Audience: If I use another person’s or another country’s info for KYC, and then cash out U into fiat, doesn’t that fully hide my identity from tax authorities?

Calix: If you use someone else’s identity for KYC, the tax risk depends on which country that identity belongs to. If that country participates in CRS, the tax authority may still obtain data on fiat conversions. Whether it affects you personally depends on how closely your real identity is tied to that KYC identity. If there’s no obvious link, it might not impact your taxes directly.

7. How to Pay Taxes When Using the USDT Card in Different Countries

Audience: If I link my USDT Card to WeChat Pay or Alipay and spend in different countries, how do I pay taxes?

Calix: When you spend in other countries, the relevant taxes are usually paid by the merchants—like income or sales taxes. Your own tax risk still ties back to the source of funds: Was it salary or business income? And which country are you a tax resident of? The act of spending alone doesn’t directly create new tax obligations.

8. Binding Details of Organization vs. Personal USDT Cards

Audience: If I open a USDT Card in the name of an organization and issue named cards to employees, what information gets uploaded to the payment platform—organization or personal?

Calix: Generally, there are organization cards and personal cards. If the card is issued in the organization’s name, the uploaded info is the organization’s. If it’s in an employee’s name, then it’s the individual’s KYC info. These personal cards are like traditional corporate cards—they’re tied to company funds, but the KYC might still be personal.

Audience: In practice, employee cards may not strictly check for identity consistency. Is that common?

Calix: That depends on the KYC process at card issuance. If no extra KYC check is done, then the uploaded info may just be the company’s shared info—not the individual’s. But this still depends on the issuing institution’s policy and the relevant regulatory environment.

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