According to key industry data at the intersection of traditional finance and Web3, fiat payment rails and neobank services are becoming important cogs in driving mainstream adoption and acceptance into the wider cryptocurrency space.
Speaking to Cointelegraph during the recent European Blockchain Conference in Barcelona, executives from OpenPayd, Ramp Network, and Damex revealed the growing importance of third-party payment rails and banking platforms.
OpenPayd CEO Iana Dimitrova outlined how their company handles over €3 billion in monthly transaction volume and has issued over 2 million accounts, including on several well-known cryptocurrency exchanges such as Crypto.com.
As Dimitrova explained, OpenPayd’s core offering is to provide banking and payments infrastructure to various industries, including the cryptocurrency space.
“The reality is that there is a growing distrust of the cryptocurrency world among regulators, as well as the traditional holders of payment channels, whether it’s SEPA or SWIFT, banks or the systems that manage payment channels,” Dimitrova said. .
The CEO added that fiat currency on-ramps and payment rails could bridge the gap by addressing concerns about identity and traceability, “and therefore money laundering,” which she said remains the view of traditional financial institutions and regulators.
Samuel Rondot, managing director of Damex, explained how the Gibraltar-based company specializes in providing access to fiat currencies for “high-risk category clients” including iGaming, foreign exchange, family offices and hedge funds. The company typically converts large amounts of cryptocurrencies into fiat currencies and vice versa in euros, pounds, and dollars.
Damex customers deal with the reputation of their bank accounts on an almost daily basis as they look to interact with the cryptocurrency ecosystem. When thinking about why banks remain “allergic to cryptocurrencies,” Rondot said the problem stems from a misunderstanding of “tools and principles.”
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This has led to the creation of services such as OpenPayd and Ramp, which have begun to fill the role of professional players, understand and facilitate AML and KYC processes and act as third parties, “blocking” traditional banks from directly handling cryptocurrency-related business.
“Suppose you use OpenPayd IBAN to make a cryptocurrency-to-fiat payment. You then transfer the money to your main bank account. It’s a completely different process and the bank won’t have any problems,” Rondot said.
The Managing Director of Damex emphasized the importance of these services in conducting the necessary due diligence and the willingness to do business with crypto-related businesses to allow fiat currencies to flow between traditional finance and decentralized finance ecosystems.
Ramp Network CEO and co-founder Szymon Sypniewicz outlined how their service provides a single API platform for global fiat systems. Ramp’s API and SDK provide access to regulatory-compliant technical settings, allowing users to buy and sell cryptocurrencies globally.
Sypniewicz explained that Ramp’s infrastructure allows crypto-related businesses to offer credit cards, debit cards, local payment methods, and bank transfer capabilities so that users can acquire cryptocurrency or pay for services:
“The goal here is to make the transition to crypto products so smooth and seamless that people won’t notice that they are now interacting with a completely new technology setup.”
When asked how difficult it is for crypto-native businesses to open a bank account or access payment channels, all three highlighted the gap between emerging and existing fintechs as an ongoing pain point.
“I think one of the main challenges we see is that the banking technology of existing banks doesn’t really match the level of innovation, speed and agility that all their products and customers require,” Dimitrova said.
This is a big reason why infrastructure providers are able to aggregate different payment channels, different banks and different pipelines, she added.
“We can go to Szymon and provide him with an API that allows him to access multiple countries, multiple jurisdictions, multiple currencies and get the same level of service and experience across the board.”
Sypniewicz added that how difficult it is for cryptocurrency companies to obtain banking services depends on how specialized they are. Platforms like Ramp effectively act as “regulatory technologists”, bringing together dozens of global bank and payments provider partners.
“We basically meet all the regulations that you need to specialize in to meet the requirements. End users are able to acquire their cryptocurrencies and interact with your platform, wallet, NFT market or next-generation DeFi product.”
Compliance standards are another prerequisite for wider adoption and acceptance of crypto-native businesses. Sypniewicz, Dimitrova and Rondot agreed that the development of the EU Market for Crypto-Assets (MiCA) framework will provide a common framework for Web3 and TradFi participants to operate more easily.
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