Author: Liu Honglin, Manquan Law Firm

According to Foresight News, the transparency page of Tether shows that the authorized issuance of USDT on the TON chain has exceeded 1 billion US dollars, reaching 1,030,000,002 US dollars. This data is not only an important milestone in the development of the TON blockchain, but also has prompted further thoughts on the future of Web3 payments by Liu Honglin, a lawyer at Manquan Law Firm.

Viewing the Popularization of Web3 Payments from the Leap of China's Internet

Globally, China's mobile payments can be said to be far ahead. For ordinary Chinese netizens, sending a red packet or making a transfer on WeChat is just a small matter, taking only a few seconds. However, when traveling abroad, one realizes that the global payment environment is far less convenient than in China. Although mobile internet payments are well established in some developed country cities, in many countries and regions around the world, mobile payments are still a luxury. Many places lack widespread bank accounts, and even basic banking infrastructure is not in place.

For people in these areas, it may be similar to China's development of the internet, where they did not go through the PC desktop internet phase, but instead directly entered the era of mobile internet, skipping traditional centralized and restricted mobile payment solutions like Alipay, and directly embracing the new experience of Web3 payments.

After all, the lack of path dependence may result in less constraint on the development of mobile payments in these localities. Through cryptocurrencies and digital wallets, those in countries and regions without access to traditional banking services can directly participate in the global financial system, which is clearly a revolutionary change. Just as mobile smartphones have a revolutionary advantage over PCs, Web3 payments have several distinct advantages over traditional payment networks:

Global Accessibility

Web3 payments transcend borders, allowing users to transfer funds globally without the need for approval and delays from traditional financial institutions. Traditional payment networks rely on the infrastructure of banks and financial institutions in each country, while Web3 payments, through blockchain technology, achieve decentralized cross-border payments, significantly reducing transaction times.

Transparency and Low Costs

Unlike traditional payments that rely on intermediaries or third-party institutions, Web3 payments rely entirely on smart contracts and blockchain technology, eliminating cumbersome fees. The costs of Web3 payments are significantly lower than those of traditional financial payment systems, as they do not require high transaction fees through banks or payment service providers.

Decentralization and Privacy Protection

The core of Web3 payments is decentralization, which allows users to no longer depend on banks or payment platforms, providing more privacy and autonomy. Traditional payment networks typically involve the collection and storage of user privacy data, while Web3 payments allow users to complete transactions in a decentralized environment, protecting personal privacy from infringement.

Flexibility of Assets

In Web3 payments, users can use not only fiat currency but also stablecoins such as USDT, as well as other cryptocurrencies for payments. This makes the Web3 payment system more flexible and adaptable to the needs of different countries and regions, especially in places with underdeveloped financial infrastructure, where Web3 payments provide an effective alternative.

How to View the Integration of Web3 Payments and TON?

As the official platform of Telegram, the TON blockchain's technological advantages, large user base, and demand for stablecoins have jointly driven the expansion of Web3 payment applications on the TON chain. The TON blockchain technology features efficiency, security, and low costs. This makes the TON chain an ideal platform for Web3 payments, with its high throughput and low transaction costs attracting more users and developers to deploy payment solutions on TON. Compared to other public chains, the TON chain has stronger performance in handling large-scale transactions while maintaining decentralization and security. Since 2021, Telegram's user base has exceeded 700 million and has maintained double-digit growth annually. Especially in the Middle East, Eastern Europe, and the CIS countries, Telegram users rely on this decentralized communication tool for cross-border communication and payments, especially in areas with weak or restricted financial systems. Web3 payment services on the TON chain, combined with Telegram, easily reach these user groups, meeting their cross-border payment and financial needs. In the Middle East, Telegram has gradually become the main communication tool in financially regulated countries, and users in countries such as Iran and Turkey particularly rely on this platform. Due to the inadequate financial systems in these regions, the acceptance of cryptocurrencies is high, prompting the use of USDT and other cryptocurrencies on the TON chain to hedge against inflation and facilitate cross-border payments. The rapid growth in the issuance of USDT on the TON chain directly reflects the global demand for stablecoins, particularly in countries with high inflation or capital controls, such as Venezuela and Argentina, where users use USDT for hedging and value preservation. The combination of the TON chain and Telegram not only allows users to use stablecoins in a decentralized environment but also significantly reduces the costs of traditional cross-border payments. This combination of user base and the demand for Web3 payments makes the TON chain an ideal platform for the issuance of stablecoins and encrypted payments. Web3 payment services on the TON chain not only effectively fill the gaps in traditional banking systems but also further promote the application and popularization of decentralized finance.

Opportunities and Compliance Challenges for Entrepreneurs

For entrepreneurs, Web3 payments not only provide efficient payment services to global users but also expand more business opportunities through participation in the DeFi ecosystem. However, the Web3 payment sector also faces significant compliance challenges. Especially in entrepreneurial projects involving virtual currency payments and settlements, strict compliance with international standards such as KYC (Know Your Customer), KYT (Know Your Transaction), and AML (Anti-Money Laundering) is crucial to ensuring legal and compliant business operations.

Compliance Requirements for KYC and KYT

In the Web3 industry, KYC (Know Your Customer) is one of the basic compliance requirements for virtual currency payment projects. Through KYC, companies can verify users' identity information to ensure their true identity and legal source of funds. However, the decentralized nature of the Web3 industry means that relying solely on KYC may not be sufficient to address potential risks. Therefore, more and more companies are combining KYC with KYT (Know Your Transaction) technology. KYT focuses on user transaction behavior and, based on the public transparency of the blockchain, can monitor and analyze suspicious transaction activities in real time. For example, the KYT system analyzes transaction paths, asset flows, and other information to determine whether there are suspicious activities such as large transfers or frequent cross-border transactions. Similar to AML in traditional financial systems, KYT can more accurately identify potential money laundering activities and provide companies with a more comprehensive risk assessment tool. The advantage of combining KYT is that entrepreneurs can not only obtain users' basic information but also track users' behavior patterns in real time, identifying potential illegal transaction risks. This behavior-based monitoring method is particularly suitable for the high liquidity and strong anonymity in the Web3 payment sector, helping to address the shortcomings of relying solely on KYC.

AML Measures

AML (Anti-Money Laundering) is a key area of global regulation for virtual currency transactions. The anonymity and cross-border nature of virtual currencies make them susceptible to being used for money laundering and terrorist financing. Therefore, when conducting Web3 payment business, entrepreneurs need to establish clear AML policies, monitor suspicious transaction activities, and promptly report to relevant authorities. This is not only a legal compliance requirement but also effectively protects companies from engaging in illegal activities, thereby reducing legal risks. By combining KYC, KYT, and AML measures, entrepreneurs can greatly enhance their 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 regulatory authorities, laying a solid foundation for the long-term development of the business.

Tax and Cross-Border Compliance Risks

In addition, tax compliance for virtual currency payments is receiving increasing attention from countries around the world. Entrepreneurs need to understand the tax policies of their countries or regions and ensure compliance with tax reporting requirements. Failure to comply with tax reporting requirements may result in fines or even criminal liability. Furthermore, when operating in global markets, entrepreneurs must consider the legal differences in different jurisdictions. Countries have vastly different attitudes towards virtual currencies, with some countries completely banning virtual currency transactions, while others implement strict regulatory frameworks. Therefore, when expanding into new markets, entrepreneurs must thoroughly research the legal environment of the target market to ensure compliance with local laws.

Summary by Manquan Law Firm

The issuance of USDT on the TON chain exceeding 1 billion US dollars marks the rapid expansion of the influence of Web3 payments globally. Especially in areas with inadequate traditional financial services coverage, Web3 payments provide a new alternative, helping users in these areas overcome the barriers of traditional financial systems. Through integration with Telegram, the TON chain has further expanded the broad application scenarios of Web3 payments, meeting the global demand for convenient payments. Overall, 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.

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