Unlocking institutional Web3 Adoption: The significance of fiat on-ramps and banking partners"

Unlocking institutional Web3 Adoption: The significance of fiat on-ramps and banking partners

Fiat payment rail services and neobanking platforms are playing a pivotal role in combating institutional mistrust within the cryptocurrency sector. Industry experts at the intersection of traditional finance and Web3 highlight the growing significance of third-party payment rails and banking platforms for mainstream cryptocurrency adoption.

Iana Dimitrova, CEO of OpenPayd, emphasized their role in processing over €3 billion in monthly transactions and issuing more than 2 million accounts, including those for major cryptocurrency exchanges like Crypto.com. OpenPayd focuses on providing banking and payment infrastructure, particularly for the cryptocurrency industry.

Dimitrova explained that there’s a growing level of mistrust from both regulators and traditional payment rail custodians like SEPA or SWIFT. This mistrust revolves around issues related to identity verification, traceability, and concerns about money laundering, which are still prevalent among traditional financial institutions and regulators.

Samuel Rondot, the Managing Director of Damex, discussed how their firm specializes in providing fiat on and off-ramps for high-risk clients, such as iGaming, Forex, family offices, and hedge funds. Damex frequently converts large amounts of cryptocurrency to fiat and vice versa in euro, pounds sterling, and U.S. dollars. Clients often face difficulties due to their involvement with cryptocurrencies, leading to reputational issues with their bank accounts.

Rondot suggested that the reluctance of banks to engage with cryptocurrencies stems from a lack of understanding of the technology and principles involved. In response, services like OpenPayd and Ramp are emerging as specialized intermediaries that facilitate anti-money laundering (AML) and know your customer (KYC) processes, shielding traditional banks from direct involvement with cryptocurrency-related businesses.

Szymon Sypniewicz, CEO and co-founder of Ramp Network, detailed how their services offer a single API platform to the global fiat system. Ramp’s API and SDK provide access to a regulatory-compliant technology setup that enables users to buy and sell cryptocurrencies worldwide.

Ramp’s infrastructure allows crypto-related businesses to offer credit cards, debit cards, local payment methods, and bank transfer functionality for users to acquire cryptocurrencies or make payments, making the transition to crypto-enabled products seamless.

The common challenge faced by crypto-native businesses is the gap between emerging and existing financial technologies, as highlighted by all three experts. The technology of traditional banks often falls short of the innovation, speed, and agility required by their products and customers. Infrastructure providers like OpenPayd and Ramp are bridging this gap by aggregating different payment rails, banks, and channels, offering a consistent experience across multiple jurisdictions and currencies.

Moreover, regulatory compliance is a crucial prerequisite for broader adoption and acceptance of crypto-native businesses. Sypniewicz, Dimitrova, and Rondot agreed that the development of the European Union’s Markets in Crypto-Assets (MiCA) framework will provide a common regulatory framework for both Web3 and traditional finance players, easing the operational challenges faced by the crypto industry.