Fiat payment rails and neobanking services are becoming a vital cog in driving mainstream adoption and acceptance of the wider cryptocurrency space, according to key industry figures at the intersection of traditional finance and Web3.
Executives from OpenPayd, Ramp Network and Damex unpacked the increasing importance of third-party payment rails and banking platforms in conversation with EdaFace during the recent European Blockchain Convention hosted in Barcelona.
OpenPayd CEO Iana Dimitrova outlined how their firm processes over €3 billion of monthly transaction volume and has issued over 2 million accounts, including several prominent cryptocurrency exchanges, including the likes of Crypto.com.
As Dimitrova explained, OpenPayd’s core offering is banking and payments infrastructure for various industries including the cryptocurrency space.
“The reality is that there is a growing level of mistrust on behalf of both regulators as well as traditional holders of access to payment rails, whether that’s SEPA or SWIFT, banks or systems that manage the payment rails insofar as the crypto world is concerned,” Dimitrova said.
The CEO added that fiat on-ramps and payment rails could bridge the gap by addressing concerns around identity and traceability, “ergo money laundering,” which she says remains a perception held by traditional financial institutions and regulators.
Samuel Rondot, the managing director of Damex, unpacked how the Gibraltar-based firm specializes in providing fiat on and off-ramps for “higher risk category clients,” including iGaming, Forex, family offices and hedge funds. The company typically converts large amounts of cryptocurrency to fiat and vice versa in euro, pounds sterling and U.S. dollars.
Damex’s clients deal with reputational issues with their bank accounts on an almost daily basis because they want to interact with the cryptocurrency ecosystem. Pondering why banks remain “allergic to crypto,” Rondot suggests that the problem comes from a misunderstanding “of the tool and the principle.”
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This has led to the creation of services like OpenPayd and Ramp, which are beginning to fill the role of specialist actors that understand and facilitate AML and KYC processes and act as a third party, “shielding” traditional banks from directly dealing with cryptocurrency-related businesses.
“Let’s say you do a crypto-to-fiat payment with an OpenPayd IBAN. You then move this money toward your main bank account. It’s a completely different process and the bank will not have a problem with that,” Rondot said.
The Damex MD highlighted the importance of these services in carrying out the necessary due diligence, mixed with the willingness to do business with crypto-related businesses, to allow fiat to flow between traditional finance and decentralized finance ecosystems.
Szymon Sypniewicz, CEO and co-founder of Ramp Network, outlined how their services offer a single API platform to the global fiat system. Ramp’s API and SDK provide access to a regulatory-compliant tech setup that allows users to buy and sell cryptocurrencies worldwide.
As Sypniewicz explains, 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 pay for services:
“The aim here is to make the transition to crypto-enabled products so smooth and seamless that people would stop noticing that they are now interacting with an entirely new tech setup.”
When asked how difficult it is for crypto-native businesses to open bank accounts or access payment rails, all three highlight the gap between emerging and existing financial technologies as a continual pain point.
“I guess one of the main challenges that we see is that the banking technology of incumbent banks does not really correspond to the level of innovation, speed and agility that all of their products and customers require,” Dimitrova said.
She adds that is a prominent reason why infrastructure providers that can aggregate different payment rails, different banks and different channels exist.
“We can go to Szymon and give him a single API and allow him to get access to multiple countries, multiple jurisdictions, multiple currencies and have an equivalent level of service and experience across the board.”
Sypniewicz adds that the difficulty of crypto-firms getting banked comes down to how specialized they are. Platforms like Ramp effectively act as “regulatory technology specialists,” aggregating dozens of global banking and payment provider partners.
“All the regulations that you need to specialize in to be able to meet the requirements are fundamentally met by us. The end user is able to take their crypto, interact with your platform, wallet, NFT marketplace, or new generation DeFi products.”
Compliance standards are another prerequisite for wider 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 framework for Web3 and TradFi players to operate more easily.
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