Technology and regulation are not opposites. If technology is not compliant, it may only be a temporary tool; if compliance does not have technology, it will be difficult to support new payment needs.
Crypto cards are becoming an important interface for digital assets to enter real-world payment networks. From online subscriptions to offline consumption, from cross-border spending to corporate expense management, these products are rapidly expanding by converting on-chain value into payment capabilities accepted by global merchants.
However, while growing, a frequently discussed model has also attracted the attention of regulators and the market – the so-called “No-KYC” (Know Your Customer) crypto card. According to Fintech Business Weekly, some services use the structural design of corporate card issuing channels to place end users in a relatively ambiguous position, thereby weakening or even circumventing the personal identification process. On the surface, users get a lower threshold and faster card opening experience; but from a regulatory perspective, this model may create a real risk loophole.
“No KYC” is not a technological innovation, but a regulatory arbitrage. The so-called “No KYC” is not that the card issuer gives up compliance, but that the structural design makes it difficult for regulators to truly identify the end user. A common practice is to provide payment capabilities to the public through corporate card (Corporate / Commercial Card) channels. These products originally served company employees or partners, so the focus of the review is on the corporate entity, not each cardholder. However, when the card issuing object changes from “specific people” to “unspecified public”, the use scenario has changed, but the compliance premise has not been upgraded accordingly.
At the same time, blurring business descriptions, weakening physical relationships, and even emphasizing the “privacy advantages” of avoiding review in marketing will further reduce transaction transparency. These practices do not bring real efficiency improvements, but postpone the risk. Once money laundering, fraud or sanctions-related issues occur in the link, the responsibility will still be traced back along the payment system, and the risk may eventually be borne by institutions, users and the industry:
The institution itself lacks effective identity verification, which may lead to the institution being involved in illegal activities such as money laundering, fraud, terrorist financing and even sanctions evasion. Once investigated or punished by regulatory agencies, it will not only face huge fines, but also face serious consequences such as business restrictions and license revocation.
Ordinary users have no effective way to track the source and use of funds for products without strict KYC. Once funds are lost, accounts are compromised, or involved in illegal activities, users will find it difficult to obtain legal protection or compensation for losses. In addition, when the institutional channel is closed, the restrictions usually cover all cardholders – even if many users have completed identity verification, they may not be able to continue to use it due to overall model problems. There are many cases of platforms suddenly stopping issuing cards or going offline in the market, which are often due to the fact that the compliance foundation cannot support scale growth.
Damage to industry trust and sustainability Card organizations and banks rely on a stable and controllable risk environment. Once similar situations occur repeatedly, the willingness to cooperate will naturally decline, and participants who really want to operate for a long time will be forced to bear higher thresholds.
Compliance is not an obstacle but a prerequisite for development: What does the industry need in the future? Reviewing the core contradiction of the current crypto payment ecosystem: some participants try to lower the threshold by avoiding KYC/AML requirements, but this approach is essentially using regulatory loopholes instead of innovative services. The result often brings legal risks such as money laundering and sanctions evasion, and ultimately damages user trust and industry reputation, which is one of the biggest obstacles to the healthy development of the industry.
In contrast, the consensus of more and more industry observers and research institutions is that the future crypto payment system will not be a “streaking” away from regulations, but an upgraded infrastructure with deep integration of technology and regulation. This means that the regulatory framework will gradually become clear rather than blurred, so that participants who are truly willing to operate for a long time can innovate in a predictable rule environment; payment technology is not to replace the existing system, but to deeply integrate with traditional payment and banking systems; financial infrastructure will be modularized, so that capabilities such as card issuing, transaction monitoring, clearing and compliance become combinable service modules, rather than isolated islands built repeatedly from scratch.
In this way, what can truly promote crypto payments to the mass market is not innovation that bypasses the rules, but sustainable financial capabilities built on top of the rules. Compliance is becoming a new core competitiveness.
Under this trend, some Web3 innovative card issuing platforms have placed compliance capabilities as the underlying logic of product design – including the construction of a complete link from KYC/KYB customer access, KYT transaction monitoring to continuous risk assessment. The industry is entering a more mature stage of development, and traditional payment networks, banking systems, regulatory agencies, and Web3 companies all hope to establish universally accepted connection channels. In this process:
KYC is not a formality, but a safety cornerstone. KYC helps prevent illegal activities such as fraud and money laundering, and protects the overall security of end users and payment systems. When user assets flow across borders, only participants with reliable identity verification can safely enter the global payment network.
Monitoring and risk prevention (such as AML / KYT) is the guardian line of industry credit. Not only identity verification before card issuance, but continuous transaction monitoring is an important part of ensuring the health of the payment system. Without a substantial risk identification mechanism, the entire network may be open to abusers, and once a major illegal event occurs, the impact will far exceed a single institution.
Compliance is a prerequisite for collaboration with the existing financial system. Traditional payment systems and clearing networks are mature and efficient, but they require participants to meet a series of regulatory requirements. If you want to truly send crypto assets into the mainstream payment ecosystem, rather than isolating them within the industry, compliance is a necessary basic condition.
In this round of industry compliance exploration practice, the path taken by Interlace is somewhat representative. As a financial infrastructure platform bridging Web2 and Web3, Interlace emphasizes transparent, auditable risk control and compliance capabilities in its product architecture design to support its long-term cooperation with regulated banks and payment networks. Based on this direction, compliance capabilities are not an additional module, but part of the product structure.
Specifically: support KYC/KYB identity verification processes for natural persons and enterprises in the user access stage; integrate on-chain AML and KYT monitoring capabilities in the transaction process to enhance risk transparency; adapt according to local regulatory requirements when operating in different jurisdictions; improve the interpretability and transparency of business processes in compliance review.
Currently, Interlace holds or operates relevant financial qualifications in multiple jurisdictions, including US MSB, Hong Kong TCSP and Lithuania VASP, and has passed PCI DSS Level-1 security certification. Through non-custodial wallet architecture, on-chain risk control and real-time transaction monitoring, the technical implementation of compliance goals is supported. This system improves the traceability and risk controllability of fund management, enabling companies to develop in a clearer rule environment when building global payment businesses.
The industry is entering a new stage: from available to sustainable. Technology and regulation are not opposites. If technology is not compliant, it may only be a temporary tool; if compliance does not have technology, it will be difficult to support new payment needs. The real industry evolution is to combine the two to jointly build a sustainable global payment system. This not only helps prevent risks and protect users, but also makes crypto payments the key to widespread social acceptance. As pointed out by the consensus of many parties in the industry: in the next few years, crypto payments and stablecoins will not disappear in the gray area, but will be integrated into a wider financial infrastructure to promote the comprehensive upgrade of the payment system.
[Interlace]
The Compliance Imperative: Why “No KYC” Crypto Cards Face an Uncertain Future
The crypto payment ecosystem is at a pivotal juncture where regulatory compliance is transitioning from an optional feature to a fundamental requirement. The recent scrutiny of “No KYC” crypto cards represents not just a regulatory crackdown, but a necessary evolution toward sustainable mainstream adoption. This analysis examines the implications for market participants, investors, and the broader crypto landscape.
Regulatory Arbitrage vs. Sustainable Innovation
The “No KYC” model, which utilizes corporate card issuing channels to obscure end-user identities, represents a classic case of regulatory arbitrage rather than technological innovation. While offering users lower barriers to entry and faster onboarding, these services create substantial risks across the ecosystem:
For institutions, the exposure to money laundering, fraud, and sanctions evasion could result in regulatory penalties ranging from substantial fines to license revocation. The recent enforcement actions against several non-compliant payment processors demonstrate that regulators are increasingly targeting these structural loopholes.
For users, the lack of proper KYC creates a precarious position. When funds are lost or accounts compromised, recovery options are severely limited. Moreover, when institutional channels face regulatory pressure, cardholders often face abrupt service disruptions—even those who voluntarily provided identification information.
From a market perspective, these practices erode trust in the broader crypto payment ecosystem. Traditional payment networks and banking institutions, upon which crypto payment providers depend for access to mainstream commerce, require stable and controllable risk environments. Repeated compliance failures inevitably lead to reduced cooperation and higher barriers for all participants.
Market Impact and Token Price Implications
The shifting regulatory landscape will disproportionately affect different segments of the crypto market:
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Non-compliant payment providers face existential threats, with potential token price declines as regulatory actions increase and banking partnerships dissolve.
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Compliance-focused infrastructure providers are positioned to capture market share, with potential token appreciation as institutional adoption accelerates.
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Privacy-preserving technologies that maintain compliance while offering enhanced privacy features may emerge as a valuable niche, distinct from non-compliant “No KYC” models.
The recent market movements support this thesis. Projects with transparent compliance strategies and multiple jurisdictional approvals have demonstrated relative resilience during regulatory crackdowns, while providers operating in regulatory gray areas have experienced heightened volatility.
Investment Opportunities in the Compliance Era
The transition to compliance-first crypto payments creates several compelling investment opportunities:
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Compliance Infrastructure Providers: Companies offering KYC/KYB solutions, AML/KYT monitoring, and regulatory reporting tools are positioned for significant growth as demand for these services increases.
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Multi-Jurisdictional Payment Platforms: Projects like Interlace, which maintain regulatory approvals in key jurisdictions (US MSB, Hong Kong TCSP, Lithuania VASP), are better positioned to scale globally while navigating complex regulatory landscapes.
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Banking-as-a-Service (BaaS) for Crypto: Traditional financial institutions seeking crypto exposure will increasingly partner with compliant providers, creating opportunities for middleware solutions that bridge traditional banking and crypto infrastructure.
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Regulatory Technology (RegTech) Innovations: Technologies that enable real-time compliance monitoring without compromising user experience represent a significant market opportunity.
Risks and Challenges
Despite the clear trend toward compliance, several risks remain:
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Regulatory Uncertainty: Even compliant providers face evolving regulatory requirements across jurisdictions, creating compliance complexity and potential legal exposure.
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Competitive Disadvantage: In regions with more permissive regulatory environments, non-compliant providers may temporarily outpace their compliant counterparts.
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Implementation Costs: Building robust compliance infrastructure requires significant investment, potentially creating barriers to entry for smaller projects.
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Privacy Concerns: As KYC requirements become more stringent, user privacy concerns may intensify, creating demand for privacy-preserving compliance solutions.
The Path Forward: Compliance as Competitive Advantage
The most successful crypto payment providers will embed compliance directly into their core architecture rather than treating it as an ancillary requirement. This approach, exemplified by platforms like Interlace, offers several advantages:
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Predictable Regulatory Environment: Proactive compliance reduces the risk of sudden enforcement actions or service disruptions.
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Institutional Adoption: Traditional financial institutions are more likely to partner with providers demonstrating robust compliance frameworks.
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User Trust: As crypto payments approach mainstream adoption, users will increasingly prefer services that offer security and regulatory protection.
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Scalability: Compliance-first models are better positioned to scale across jurisdictions while maintaining regulatory adherence.
Conclusion
The crypto payment industry’s transition from regulatory arbitrage to compliance-first approaches represents a maturation necessary for sustainable growth. While “No KYC” models may appeal to privacy-focused users in the short term, their long-term viability is increasingly questionable. For investors, the opportunity lies not in circumventing regulation, but in supporting infrastructure that bridges the gap between crypto innovation and regulatory requirements.
As the industry evolves, compliance will cease to be a cost center and transform into a competitive advantage—one that enables access to traditional financial systems, institutional capital, and mainstream adoption. The crypto payment providers that thrive will be those that recognize this shift and build compliance directly into their DNA rather than treating it as an afterthought.