Crypto debit cards are considered a bridge between the world of cryptocurrencies and the traditional financial system. They allow Bitcoin, Ethereum and other digital currencies to be used as normal means of payment – at supermarket checkouts, in online shops or even at ATMs. But it is precisely this everyday usability that makes them a growing problem for law enforcement agencies. The police are currently warning of an increased risk of money laundering through these cards – with far-reaching consequences for financial supervision and the fight against organised crime.

How do crypto debit cards work?

At their core, crypto debit cards work similarly to prepaid cards: the user loads the card with cryptocurrency, which is converted into fiat money – such as euros or dollars – in real time when paying. Merchants and service providers receive their payments as they would with any other debit card. The conversion is handled by the providers who issued the cards, who usually work closely with the Visa or Mastercard networks. For consumers, this service is convenient, straightforward and can be used globally.

An invitation for criminals

However, it is precisely this structure that makes crypto debit cards extremely attractive to criminals. Unlike traditional banking products, many of these cards are subject to little or no regulatory control, especially if the provider is based abroad. According to the police, supervisory authorities in many countries are hardly in a position to verify the identity of cardholders or trace the origin of the cryptocurrencies loaded onto the cards. If the card is applied for under a false name and loaded with anonymously transferred coins, it is almost impossible to trace. Rolf van Wegberg, lecturer in cybercrime at Delft University of Technology, emphasises that cryptocurrencies have long been an integral part of criminal infrastructure – for example, in ransomware attacks, drug trafficking and illegal gambling.

Crypto debit cards significantly expand this scope of action, as they make digital funds transferable into the real economy – without banks, merchants or authorities being able to intervene.

Fragmented oversight and global challenges

A key problem lies in the fragmented global oversight. Crypto card providers often operate across multiple countries, are subject to different national legal systems and deliberately exploit regulatory grey areas. According to money laundering expert Prof. Joras Ferwerda, many card providers do not carry out the required identity checks (KYC) adequately or at all. This opens the door to shell companies, straw men and fake identities – and makes the work of international investigators considerably more difficult.

Another problem is the payment networks themselves. Card providers that cooperate with Visa or Mastercard benefit from the trust and reach of these systems – often without card users or merchants knowing how poorly regulated the underlying structures really are. Although Visa and Mastercard emphasise that they do not tolerate illegal activities and check providers without proper identity checks, the effectiveness of these measures remains questionable.

Call for more responsibility in the payment network

Both Ferwerda and van Wegberg are therefore calling for greater shared responsibility on the part of the major payment networks. If cards bear the Visa or Mastercard logo, it must also be ensured that these products cannot be misused. The trust that these brands inspire should not be undermined by uncontrolled third-party providers.

This also increases pressure on regulators worldwide: they must develop cross-border standards to ensure that crypto debit cards no longer serve as a loophole for money laundering. Without international cooperation, uniform KYC/AML guidelines and clear responsibilities, there is a risk that a digital shadow banking system will emerge.

An underestimated risk with real consequences

Crypto debit cards are a prime example of how quickly technological innovations can become vulnerabilities in the financial system. The combination of digital anonymity and global acceptance makes them a serious risk – both to the integrity of payment transactions and to internal security.

The police warning should therefore not be seen as an isolated incident, but as a signal that the regulation of the digital financial market must keep pace with technological developments. This is the only way to prevent modern means of payment from becoming tools of organised crime.