Kast card users are questioning the product’s legal structure after the company’s terms said supported crypto transfers are treated as sales of virtual assets to Kast, not deposits or stored card balances.
The terms say users no longer retain ownership of the transferred stablecoins once the sale is confirmed. Kast records a USD-denominated ledger entry based on the market rate at the time of transfer, with the app balance serving as a reference for card spending rather than an account balance, deposit or stored monetary value.
Kast’s card page still presents the user flow around crypto card funding, stablecoin deposits and spending through card networks. The front-end experience can look like topping up a dollar card balance, while the legal terms place the transferred tokens inside Kast’s corporate treasury structure.
That model puts Kast inside a fast-growing consumer category where stablecoins are being pushed through card rails rather than direct merchant crypto payments. Monthly crypto card volume topped $650 million in April, with Kast listed among smaller programs gaining traction behind larger providers.
Users Hold A Ledger Claim, Not The Stablecoins
The terms say virtual assets transferred into Kast are held by a custodian on behalf of Kast, not on behalf of users. Kast can instruct the custodian to freeze, convert or transfer those assets for settlement, compliance or operations.
That leaves users exposed to the company’s ability to honor the ledger reference used for card spending. The terms also state that the company is not a bank, user accounts are not covered by loss insurance, partners do not act as trustees or escrow agents, and partner-held funds do not have to be segregated from Kast’s other accounts.
The structure gives Kast a route to offer card spending without treating user transfers as ordinary custodial balances. It also shifts risk from token custody to company solvency, partner performance, settlement controls and the enforceability of the user’s claim against the platform.
Stablecoin card products are becoming a larger part of the payments stack as apps try to turn USDC and USDT balances into everyday spending power. The same shift has made stablecoin payment rails a bigger compliance issue for companies sitting between wallet transfers, card networks and fiat settlement.
Sale Treatment Raises Tax Questions
Kast’s sale language can also create tax friction for users in jurisdictions where selling or exchanging digital assets is reportable.
The IRS treats digital assets as property for U.S. tax purposes and includes stablecoins in its digital-asset examples. Its filing guidance asks taxpayers whether they sold, exchanged or otherwise disposed of a digital asset during the tax year.
That makes the wording in Kast’s terms more than a licensing detail. A user who sends stablecoins to fund card spending may be entering a sale transaction at the moment of top-up, even when the app shows a near-dollar balance for later purchases.
Be the first to comment