Written by: Liu Honglin, Mankiw LLP
According to Foresight News, Tether's transparency page shows that the authorized issuance of USDT on the TON chain has exceeded $1 billion and reached $1,030,000,002. This data is not only an important milestone in the development of the TON blockchain, but also triggered Mankiw Law Firm's lawyer Liu Honglin to further think about the future of Web3 payments.
The Popularization of Web3 Payments from the Transformation of China's Internet
Globally, China's mobile payment can be said to be far ahead. For ordinary Chinese netizens, sending a red envelope or transferring money on WeChat is a trivial matter, a matter of seconds. Whenever you go abroad, you will realize that the global payment environment is far less convenient than that in China. Although mobile Internet payment is quite popular in cities in some developed countries, in fact, mobile payment is still a luxury in many countries and regions around the world. Bank accounts are not popular in many places, and even basic banking infrastructure is not in place.
For people in these areas, it may be like China's process of Internet development, which did not go through the PC desktop Internet, but directly entered the mobile Internet era, skipping traditional centralized and restricted mobile payment solutions like Alipay, and directly starting a new experience of Web3 payment.
After all, the absence of path dependence may have fewer constraints on the development of local mobile payments. Countries and regions that cannot enjoy banking services under the traditional model can directly participate in the global financial system through cryptocurrencies and digital wallets, which is obviously a revolutionary change. Just like the revolutionary advantages of mobile smartphones over PCs, Web3 payments have achieved obvious advantages in several aspects compared to traditional payment networks:
Global Accessibility
Web3 payments transcend national borders, and users can transfer money around the world without the need for approval and delays from traditional financial institutions. Traditional payment networks rely on the infrastructure of banks and financial institutions in various countries, while Web3 payments use blockchain technology to achieve decentralized cross-border payments, greatly shortening transaction time.
Transparency and low cost
Unlike traditional payment middlemen or third-party institutions, Web3 payment completely relies on smart contracts and blockchain technology, eliminating cumbersome handling fees. The cost of Web3 payment is significantly lower than the traditional financial payment system because there is no need to pay high transaction fees through banks or payment service providers.
Decentralization and privacy protection
The core of Web3 payment is decentralization, which allows users to no longer rely on banks or payment platforms and have more privacy and autonomy. Traditional payment networks usually involve the collection and storage of user privacy data, while Web3 payment allows users to complete transactions in a decentralized environment and protect personal privacy from infringement.
Asset flexibility
In Web3 payments, users can not only use legal tender, but also stablecoins such as USDT and other crypto assets. This makes the Web3 payment system more flexible and can adapt to the needs of different countries and regions, especially in places where financial infrastructure is underdeveloped, Web3 payments provide an effective alternative.
What do you think about the combination of Web3 payment and TON?
As the son of Telegram's official platform, TON blockchain's technological advantages, huge user base and stablecoin demand have jointly promoted the continuous expansion of Web3 payment application scenarios on the TON chain. TON blockchain technology is efficient, secure and low-cost. This makes TON chain an ideal platform for Web3 payments. Its high throughput and low transaction fees allow more users and developers to choose to deploy payment solutions on TON. Compared with other public chains, TON chain has stronger performance in processing large-scale transactions while maintaining decentralization and security. Since 2021, the total number of Telegram users has exceeded 700 million, and it has maintained a double-digit growth rate every year. Especially in the Middle East, Eastern Europe and the CIS countries, Telegram users rely on this decentralized communication tool for cross-border communications and payments, especially in areas with weak or restricted financial systems. Web3 payment services on the TON chain can easily reach these user groups and meet their cross-border payment and financial needs by combining with Telegram. In the Middle East, Telegram has gradually become the main communication tool in countries with financial controls, and users in countries such as Iran and Turkey are particularly dependent on the platform. Due to the imperfect financial system, users in these regions have a high acceptance of cryptocurrencies, which has prompted USDT and other crypto assets on the TON chain to become their choice to avoid inflation and solve cross-border payments. The rapid growth of USDT issuance on the TON chain directly reflects the demand for stablecoins among global users. This is particularly prominent in countries with high inflation or capital controls, such as Venezuela and Argentina, where users use USDT to hedge and preserve value. The combination of the TON chain and Telegram not only allows users to use stablecoins in a decentralized environment, but also significantly reduces the cost of traditional cross-border payments. This combination of user base and Web3 payment needs makes the TON chain an ideal platform for stablecoin issuance and encrypted payments. The Web3 payment service on the TON chain not only effectively fills the gap in the traditional banking system, but also further promotes the application and popularization of decentralized finance.
Opportunities and compliance challenges for entrepreneurs
For entrepreneurs, Web3 payment can not only provide efficient payment services to global users, but also expand more business opportunities by participating in the DeFi ecosystem. However, the Web3 payment field also faces considerable compliance challenges. Especially in entrepreneurial projects involving virtual currency payment and settlement, strict compliance with international regulations such as KYC (customer identity authentication), KYT (transaction behavior authentication) and AML (anti-money laundering) is the key to ensuring legal and compliant business.
KYC and KYT compliance requirements
In the Web3 industry, KYC (customer identity verification) is one of the basic compliance requirements for virtual currency payment projects. Through KYC, companies can verify the identity information of users to ensure their true identity and the legal source of funds. However, the decentralized nature of the Web3 industry makes it possible that relying solely on KYC may not be enough to deal with potential risks. Therefore, more and more companies are combining KYT (Know Your Transaction) technology while introducing KYC. KYT focuses on the transaction behavior of users. Based on the openness and transparency of blockchain, it can monitor and analyze suspicious behaviors of transaction activities in real time. For example, the KYT system will determine whether there are suspicious behaviors such as abnormal large transfers and frequent cross-border transactions by analyzing information such as transaction links and asset flows. Similar to AML in the traditional financial system, KYT can more accurately identify potential money laundering behaviors and provide companies with more comprehensive risk assessment tools. The benefit of combining KYT is that entrepreneurs can not only grasp the basic information of users, but also track users' behavior patterns in real time and identify potential risks of illegal transactions. This behavior-based monitoring approach is particularly suitable for scenarios with high liquidity and strong anonymity in the Web3 payment field, and helps to make up for the shortcomings of relying solely on KYC.
AML (Anti-Money Laundering) Measures
AML (Anti-Money Laundering) is a key area for regulating virtual currency transactions in countries around the world. The anonymity and cross-border nature of virtual currency make it easy to become a tool for money laundering and terrorist financing. Therefore, when entrepreneurs conduct Web3 payment business, they need to formulate clear AML policies, monitor suspicious transaction behaviors, and report them to relevant agencies in a timely manner. This is not only a legal compliance requirement, but also effectively protects companies from participating in illegal activities, thereby reducing legal risks. By combining KYC, KYT and AML measures, entrepreneurs can greatly improve compliance levels and reduce legal risks in virtual currency payments and settlements. This not only helps prevent illegal activities, but also enhances the trust of users and regulators, laying a solid foundation for the long-term development of the business.
Tax and cross-border compliance risks
In addition, tax compliance of virtual currency payments is also gaining more and more attention from countries around the world. Entrepreneurs need to understand the tax policies of their country or region and ensure that they file tax returns as required. Failure to file tax returns in compliance may result in fines or even criminal liability. At the same time, when operating in the global market, entrepreneurs must take into account the legal differences between different jurisdictions. The legal attitudes of different countries towards virtual currencies vary greatly, with some countries completely banning virtual currency transactions, while others have implemented strict regulatory frameworks. Therefore, when exploring the market, entrepreneurs must fully research the legal environment of the target market to ensure that they do not violate local laws.
Attorney Mankiw's Summary
The issuance of USDT on the TON chain has exceeded 1 billion US dollars, indicating that the influence of Web3 payments around the world is rapidly expanding. Especially in areas where traditional financial services are insufficient, Web3 payments provide a brand-new alternative to help users in these areas overcome the barriers of the traditional financial system. By combining with Telegram, the TON chain further expands the broad application scenarios of Web3 payments and meets the needs of global users for convenient payments. In general, the future of Web3 payments is full of opportunities, but entrepreneurs must always pay attention to compliance requirements. After all, innovation and compliance are the key to going further.
